ANNUAL REPORT - hfl.com.bd Report 2017- 18 of HFL.pdf · Bankers Bank Asia Limited Brac Bank Limited Janata Bank Limited United Commercial Bank Limited Legal Advisors Ruhul Amin and

ANNUALREPORT2017-2018

Notice of the Annual General Meeting 01

Corporate History 02

Vision, Mission, Objective 03

Corporate Directory 04

Board of Directors 05

Profile of Directors 06 - 07

Chairman’s Report 08

Directors’ Report 09 - 15

Management‘s Discussion and Analysis 16 - 18

Declaration by CEO And CFO 19

Report on the Activities of Audit Committee 20

Report on Compliance of Corporate Governance Code 21

Status of Compliance with notification of the BSEC 22 - 33

Auditor’s Report 34 - 35

Financial Statements 36 - 65

Proxy Form, Attendance Slip 66

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TABLE OF CONTENTS

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HAMID FABRICS LIMITED

NOTICE OF THE TWENTY FOURTH ANNUAL GENERAL MEETING

Notice is hereby given that the 24th Annual General Meeting of the Shareholders of Hamid Fabrics Limited will be held on Thursday, December 27, 2018 at Trust Milonayaton, 545 Old Airport Road, Dhaka at 11:00 a.m. to transact the following business:

1. To receive, consider and adopt Financial Statements for the year ended June 30, 2018 together with the Reports of Directors and Auditors thereon.

2. To declare Dividend for the year 2017-18.

3. To elect Directors as per Articles of Association of the Company.

4. To appoint Auditors for the year 2018-19 and fix their remuneration.

5. Miscellaneous.

By order of the Board Sd/- Dhaka ASM Mijanur RahmanDecember 12, 2018 Company Secretary

Notes:

(1) The Shareholders whose names will in the Depository Register on the Record Date i.e. November 26,

2018 will be entitled to attend at the Annual General Meeting and be entitled to the dividend.

(2) A member entitled to attend and vote at the Annual General Meeting may appoint a Proxy to attend and vote inhis/her stead. The Proxy Form duly stamped must be deposited at the Registered Office of the Company, at least 48 hours before the time fixed for the meeting.

(3) The Annual Report will be available in the Company’s website at www.mahingroup.com

Notice

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CorporateCorporateCorporateCorporateCorporateCorporateHistoryHistoryHistoryHistoryHistoryHistory

CORPORATE HISTORY

Company Incorporation April 27, 1995

Name Change to Hamid Fabrics Limited May 23, 2000

Conversion of the Company from Private to Public February 25, 2010

Permission from the BSEC for Public Issue September 01, 2014

Listing with Dhaka Stock Exchange Limited December 04, 2014

Listing with Chittagong Stock Exchange Limited December 04, 2014

Trading of Shares of Hamid Fabrics Limited December 04, 2014

Commencement of New Units July 25, 2016

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OUR VISIONTo be the leader in the textile sector as backward linkage of Garments Industries in

Bangladesh particularly for woven fabrics.

OUR MISSIONTo satisfy the customer by supplying quality woven fabrics with

innovative products as well as continuous quality

development.To expand market by communicating with the top

customers in global fabrics market.

OUR OBJECTIVES- To produce quality woven fabrics for the leading customers;

- To make continuous quality development of products;

- To do regular expansion of the project with new product;

- To install and update latest machinery;

- To satisfy the employees, by attractive compensation, who are backbone of the Company;

- To maintain congenial working environment within the Company;

- To comply with the regulatory matters relating to the Company affairs;

- To meet the expectations of the stakeholders of the Company.

VISIONMISSION

OBJECTIVE&

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CORPORATE DIRECTORY Board of DirectorsAHM Mozammel Hoque Chairman Abdullah Al Mahmud Managing Director Salina Mahmud Director Nusrat Mahmud Director Nabila Mahmud Director Farhana Danish Director Riaz Ur Rahman Independent DirectorDr. M. Waliuzzaman Independent Director

Audit Committee Dr. M. Waliuzzaman Chairman Salina Mahmud MemberNusrat Mahmud Member

Nomination and Remuneration Committee (NRC)Dr. M. Waliuzzaman Chairman Salina Mahmud Member Nabila Mahmud Member

Company Secretary ASM Mijanur Rahman

Chief Financial Officer Md. Mushaddeque Ali

Head of Internal Audit Md. Maruf Shahria

Auditors M/S Zoha Zaman Kabir Rashid & Co., Chartered Accountants

Bankers Bank Asia Limited Brac Bank Limited Janata Bank Limited United Commercial Bank Limited

Legal Advisors Ruhul Amin and Associates

Insurers Crystal Insurance Company Limited

Credit Rating Agency Credit Rating Agency of Bangladesh Ltd. (CRAB)

Registered Office Hamid Tower (5th & 6th floor) 24, Gulshan C/A, Circle 2, Dhaka 1212. Tel.: (+8802) 883 4564-5, 883 4104, 989 4589 Fax: (+8802) 5881 3077 Email: [email protected] Web: www.mahingroup.com

Factory Shilmandi, Narshindi

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BOARD OF DIRECTORS

AHM Mozammel HoqueChairman

Abdullah Al MahmudManaging Director

Riaz Ur RahmanIndependent Director

Dr. M. WaliuzzamanIndependent Director

Nabila MahmudDirector

Nusrat MahmudDirector

Salina MahmudDirector

Farhana DanishDirector

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Mr. AHM Mozammel Hoque, Chairman

Mr. AHM Mozammel Hoque is the Chairman of Hamid Fabrics Limited (HFL). He completed his Bachelors of

Commerce degree from Jagannath College in 1960. He has been actively involved in the textile sector for more

than 20 years. Prior to joining HFL, he was the Deputy Chief Accountant in Bangladesh Jute Mill Corporation (BJMC)

for 25 years after that he entered the RMG business in 1993. Apart from being a founder director of HFL, Mr. Hoque

is also a founder Director of Hamid Weaving Mills Limited and Crystal Insurance Company Limited.

Mr. Abdullah Al Mahmud, Managing Director

Mr. Abdullah Al Mahmud is the Managing Director of Hamid Fabrics Limited (HFL). He is one of the well-known

business personalities in Bangladesh. As an enthusiastic and dynamic young entrepreneur he has been involved in

the RMG and Textile sector for last 25 years. He is the founder and majority shareholder of Hamid Fabrics Limited,

which is a concern of Mahin Group.

The Group has experienced a rapid yet steady growth under his leadership and vision. Upon completion of his

graduation from the USA in 1992, Mr. Mahmud returned to Bangladesh and set up his own business. In the follow-

ing year, he founded and established an RMG unit called Mahin Apparels Limited, which specialized in making

bottoms. During that time, he acknowledged the need for backward linkage in the industry. He eventually set up

Hamid Fabrics Limited with its Weaving Unit at Shilmandi, Narsingdi in 1996 and subsequently the Dyeing and

Finishing unit in 2003.

Mr. Mahmud is on the Board of a few other companies. He is the Chairman of Crystal Insurance Company Limited,

Chairman of Hamid Weaving Mills Limited and Tazrian Weaving Mills Limited, which is the latest addition to Mahin

Group.

He was elected as a Director of BGMEA (Bangladesh Garment Manufacturers & Exporters Association) for the year

of 2013-14. He took part in many business dialogues as delegate member representing Bangladesh, and is also

involved in many business forums and social causes. He held CIP and highest tax payer statuses as recognition to

his direct contribution to the Country’s economy. He is also a member of the Executive Committee of Bangladesh

Association of Publicly Listed Companies (BAPLC) and Vice President on the Board of Bangladesh Textile Mills

Association (BTMA).

Mrs. Salina Mahmud, Director

Mrs. Salina Mahmud is a shareholder Director of Hamid Fabrics Limited. She graduated from Eden College. After

graduation she involved herself in various social activities in Dhaka. Her enduring inspiration and support

nurtured the growth of Mahin Group from its inception in 1993 to date.

PROFILE OF DIRECTORS

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Ms. Nusrat Mahmud, Director

Ms. Nusrat Mahmud is a Director of Hamid Fabrics Limited and joined the management team of the RMG and

Textile division of the Group in 2010. She has successfully completed Bachelors of Science in Marketing from

Bentley University in Waltham, Massachusetts, USA in 2008 and completed her Masters in Management from Cass

Business School, City University in London in 2009. Ms. Mahmud is a dynamic and avid learner and is expected to

further enhance and build on the “Hamid” brand. She is also a founder Director of Hamid Weaving Mills Limited and

Tazrian Weaving Mills Limited.

Ms. Nabila Mahmud, Director

Ms. Nabila Mahmud is a Director of Hamid Fabrics Limited. She has successfully completed her Bachelors in

International Business from Suffolk University, Boston, USA in 2014. After that she has engaged herself in the

development of business of the Group.

Mrs. Farhana Danish, Director

Mrs. Farhana Danish is a Director of Hamid Fabrics Limited. She is also a Director of Crystal Insurance Company

Limited. As a proprietor of Crystal Packaging, she has had exposure in different business areas of the RMG sector

for the past 17 years.

Mr. Riaz Ur Rahman, Independent Director

Mr. Riaz Ur Rahman is an Independent Director of Hamid Fabrics Limited. He is a B.Sc. in Chemistry and Chemical

Engineering from the USA. He has got 30 years of industrial experience in home and abroad.

Dr. M. Waliuzzaman, Independent Director

Dr. M. Waliuzzaman has got more than four decades of governance experience, which includes working

experiences from Commerce & Industries Ministry, Pakistan; Industrial Development Bank of Pakistan,

subsequently Bangladesh Shilpo Bank, now BDBL; East Pakistan Industrial Development Corporation; Bangladesh

Petroleum Corporation; Bangladesh Council of Scientific and Industrial Research (BCSIR); Public Administration

Reforms Commission (PARC), GoB and visiting Teacher, BUET. He is a Ph.D. from the University of Manchester, UK.

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Dear Shareholders,

On behalf of the Board of Directors, I welcome you all to the 24th Annual General Meeting of your Company. It is indeed an honor and privilege for me to place before you the Annual Report including the audited Financial Statements, Auditors’ report and Directors’ report thereon for the year ended June 30, 2018.

The Company has entered into the renovated and expanded production system. It is expected that the Company can utilize its optimum production capacity in the coming years.

In the year 2017-18, total revenue earned is Tk 2335.5 million compared to Tk1322.7 million during 2016-17. Net Profit after tax for the year stands at Tk 182.8 million which was Tk 72.1million in the last year. This year, the Company has injected a good amount of money for acquisition of fixed assets.

This year the Board of Directors has recommended dividend for the General Shareholders only to respect their expectations.

I would like to express my sincere thanks to the respected Shareholders for their confidence rested on the Company. We are grateful to Bangladesh Securities and Exchange Commission, Dhaka Stock Exchange Limited, Chittagong Stock Exchange Limited, Registrar of Joint Stock Companies & Firms, Central Depository Bangladesh Limited, Banks and Financial Institutions, ICB Capital Management Limited and other stakeholders for their continuous support and patronage extended to the Company. We are optimistic about getting the same support from all the stakeholders in the coming years. I also express my gratitude to all the employees of the Company for their sincere and devoted services to the growth of the Company.

In conclusion, I request the Shareholders to consider the annual Financial Statements, Auditors’ report, Directors’ report, etc. for the year 2017-18.

Thank you again.

Sd/-AHM Mozammel HoqueChairman of the Board

CHAIRMAN’S REPORT

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DIRECTORS’ REPORT

Dear Shareholders,

On behalf of the Board of Directors, I would like to submit herewith the 24th Annual Report of the Company together with the audited Financial Statements for the year ended June 30, 2018 and the Auditors’ Report thereon.

Prime Activities Hamid Fabrics Limited is one of the leading manufacturers of high quality textiles in Bangladesh. Because of supe-rior quality, HFL’s products are nominated by globally renowned buyers such as GAP, Zara, Marks & Spencer, Tommy Hilfiger, H&M for sourcing textile to RMG manufacturers in Bangladesh.

The product range offers 100% cotton fabrics as well as blended fabrics such as cotton/polyester, cotton/viscose, nylon/cotton and cotton/lycra. The weaving unit produces gray fabrics in various design and constructions such as Twill, Canvas, Oxford, Rib stop, Rib cord, Ottoman, Herringbone, and various dobby designs with weight range of 100-450 GSM. The finishing mix of Hamid Fabrics Limited comprises water repellent, fire proof, wrinkle free, teflon coating, aero finish and chintz finish etc. The major markets for HFL’s products are the United States of America and the European Union.

Financial ResultsThe financial results are presented in brief below:

DividendThe Board of Directors of the Company is pleased to recommend dividend @10% cash for general shareholders only for the year 2017-18 i.e.for the Shareholders other than Directors.

Additional statements by the Board of Directors as per notification dated 3 June 2018 of Bangladesh Securities and Exchange Commission

(i) Industry outlook and possible future developments in the industryHamid Fabrics Limited produces high quality fabrics that are sold to RMG manufacturers in Bangladesh which are in turn exported as finished products. Therefore, HFL is a “deemed exporter” and qualifies for all export incentives and benefits. The Company usually offers to deliver the products to the premises of RMG Units. Most of the sales go to RMG units situated within the range of greater Dhaka region as well as Chittagong who are nominated by the ultimate foreign buyers.

(ii) Segment/Unit wise or product wise performanceHamid Fabrics Limited has three production units: 1) Woven Fabric, 2) Gray Fabric and 3) Yarn Dyeing which are interdependent. Woven Fabric has installed capacity to produce 32.40 million yards of finished dyed fabrics annually. Gray Fabric unit is a renovated unit having annual capacity of 9.88 million yards of gray fabrics and Yarn Dyeing unit has an annual capacity of dyeing 2.74 million kg of yarn.

Particulars Revenue 2,335,482,932 1,322,686,460 Gross Profit 646,207,917 408,865,964 Operating Profit 365,998,481 218,590,698 Net Profit Before Tax 216,697,218 86,944,522 Net Profit After Tax 182,840,047 72,057,481 Retained earnings brought forward 890,721,394 878,738,399 Profit available for appropriation 1,013,168,740 890,721,394

2017-18 (Taka) 2016-17 (Taka)

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The following table illustrates the production capacity of different units and its utilization:

iii) Risks and concernsRisk refers to the variability of expected outcome, which is a complex and multifaceted phenomenon. Invest-ment in equity securities involves a high degree of risk, which needs to be explicitly evaluated while making an investment decision. Hamid Fabrics Ltd is operating in an industry that is subject to both external and internal risks. Some of these risks can be managed while some are beyond control, which may result in loss for investors. However, the management of the Company constantly explores ways and means for mitigating such risks.

MANAGEMENT RISKThe textile industry of Bangladesh already experiences a great shortage of skilled management personnel. Because of high demand from employers they tend to switch between jobs for financial and other benefits. Hence, if a key manager, executive or employee quits his/her job, it could affect business continuity, operating results and future growth of HFL. Management risk also arises from succession crisis if subsequent teams of leadership are not created within the organization.

Management perception about this Risk The Company places a great importance to human resource and leadership development. The staff is brought under relevant on-the-job, in-house and external training programs. HFL recognizes the commit-ment and contribution of employees for the growth of the Company. A culture of objective performance appraisal and effective reward system has helped to create job-security and motivation of employees. As a result, HFL has relatively low employee turnover in key management positions. Key management team of HFL is almost unchanged for more than five years, which shows the general loyalty to the organization. HFL has developed layers of alternative leaderships in all critical areas of its activities.

OPERATIONS RISKThis involves the risk of not being able to maintain the expected performance by the Company. Such risk could arise from both internal and external factors discussed above such as industry, management, technol-ogy, regulations, utilities etc.

Management perception about this Risk As explained above, operations risk could arise from a variety of factors. The risk mitigation strategies for such factors have been explained separately above. The experienced management team continuously monitors the new developments in these areas in order to take proactive measures to minimize any negative implica-tions to the Company and capitalize on potential opportunities.

MARKET RISK Market risk arises from adverse market conditions affecting sales and profitability of any Company. A few factors may trigger market risk for HFL such as changes in consumer behaviours, demographics, introduction of substitute products, competition and other unfavourable global conditions such as economic depression, wars etc.

Management perception about this Risk HFL is a textile manufacturer producing inputs for the export oriented Ready Made Garment units in Bangla-desh. Because of established track record of shorter lead time and quality of products, the Company enjoys a

Woven Fabric* Yard 32,400,000 24,222,396 74.76%

Gray Fabric* Yard 9,878,000 9,572,849 96.91%

Yarn Dyeing Kg. 1,368,750 881,714 64.42%

Particulars Unit Installed capacity UtilizationUtilization during the period

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steady growth in supply orders. In addition to this, strong research & development, marketing and brand management have helped the Company to increase its customer base. As a result, HFL has already achieved recognition from globally renowned buyers like Marks & Spencer, H&M, PVH, Tema, Next, C&A, S’Oliver etc. and remains as one of the market leaders in Bangladesh for solid dyed fabrics.

INDUSTRY RISKSUnexpected technological developments and regulatory changes that are specific to the Textile & Apparel industry might have an adverse impact on the business performance of the Company. It also involves the risk of increased competition arising from foreign and domestic textile manufacturers resulting in contraction of profit margin and loss of market share. Further, the textile industry is heavily dependent on the performance of RMG industry, which faces threats stemming from international competitors viz. China, India and Vietnam etc. Hence the textile industry of Bangladesh is always under pressure to deliver cost-efficient and quality fabrics.

Management perception about this RiskHFL keeps pace with technological advancements using modern machineries and equipment. Moreover, the modern technology has not cannibalized the traditional manufacturing methods such as hand looms indicating a lower level of obsolescence risk. The Textile & Apparel is a priority sector for the Government and it is unlikely that the Government will impose unfavorable regulatory changes to this industry.

(iv) Discussion on Cost of Goods Sold, Gross Profit Margin and Net Profit Margin

(v) Discussion of continuity of any Extra Ordinary gain or loss No such material gain or loss during the year.

(vi) Basis for related party transactions Related party transactions are stated in note 35 of the Financial Statements.

(vii) Utilization of proceeds from Public Issue IPO fund was utilized as per IPO prospectus and it was disclosed in the previous years.

(viii) Explanation if the financial results deteriorate after the Company goes for IPO No such incidence during this financial year.

(ix) Explanation of significant variance occurs between Quarterly Financial Performance and Annual Financial StatementsNo significant variance has occurred between Quarterly Financial Performance and Annual Financial Statements. But overall variation with the annual performance was disclosed accordingly.

(x) Remuneration paid to Directors including Independent DirectorsRemuneration to Directors has been shown in note no. 28 of the Financial Statements.

(xi) Fairness of Financial StatementThe Financial Statements prepared by the management of the Company present fairly its state of affairs, the result of its operations, cash flows and changes in equity.

(xii) Maintenance of proper books of accountProper books of account have been maintained by the Company.

Revenue 2,335,482,932 1,322,686,460

Cost of goods sold (1,689,275,015) (913,820,496)

Gross profit 646,207,917 408,865,964

Profit before tax 216,697,218 86,944,522

Net profit 182,840,047 72,057,481

Particulars 2017-18 (Taka) 2016-17 (Taka)

Raw materials & others Salary & wages Operational expenses Financial expenses Taxation DividendRetained earnings

Distribution of Revenue

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(xiii) Adoption of appropriate accounting policies and estimatesAppropriate accounting policies have been consistently applied in preparation of the Financial Statements and the accounting estimates are based on reasonable and prudent judgment.

(xiv) Compliance with Accounting and Financial Reporting Standards International Accounting Standard (IAS), Bangladesh Accounting Standard (BAS), International Financial Reporting Standard (IFRS) and Bangladesh Financial Reporting Standard (BFRS), as applicable in Bangladesh, have been followed in preparation of the Financial Statements.

(xv) Soundness of Internal Control SystemInternal Control System is sound in design and has been effectively implemented and monitored.

(xvi) Protection of interest of minority shareholdersThe Board of Directors is very concerned of and committed to protection of interest of minority shareholders. Management has been instructed to take sincere and timely measures to address any valid grievances raised by the shareholders. Contact numbers with email address have been published on the website of the Company for communication.

(xvii) Ability to continue as going concern There is no significant doubt upon the Company’s ability to continue as a going concern.

(xviii) Significant deviations in Operating Results compared to last yearTurnover and other related financial results have changed significantly during this year due to commence-ment of operation of new weaving unit and yarn dyeing unit of the Company, which has been disclosed in the financial statements under note no. 26.

(xix) Key operating and financial data of preceding 5 (five) years Provided on page no 16.

xx) Reasons for not declaring dividend Not applicable.

(xxi) No bonus share or stock dividend has been declared or shall be declared as interim dividendManagement asserts that no bonus share or stock dividend has been declared or shall be declared as interim dividend.

(xxii) Number of Board Meetings held during the year and attendance

* Dr. M. Waliuzzaman was appointed as Independent Director to fill in the vacant position for retirement of Syed Anisul Huq.

Name of Directors Meetings held Meetings attended

Abdullah Al Mahmud 7 7

AHM Mozammel Hoque 7 7

Salina Mahmud 7 7

Nusrat Mahmud 7 7

Nabila Mahmud 7 7

Farhana Danish 7 5

Syed AnisulHuq* 4 4

Riaz Ur Rahman 7 4

Dr. M. Waliuzzaman* 2 2

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(xxiii) Shareholding pattern as on June 30, 2018

(c) Directors, Company Secretary, Chief Financial Officer, Head of Internal Audit and their spouses and minor children

(d) Shareholdings of top five executives

(e) Shareholders holding 10% or more voting interest in the Company

(xxiv) Appointment/ re-appointment of DirectorsThe following Directors will retire as per Articles of Association of the Company and be eligible for re-appointment:

Mrs. Salina Mahmud will retire in the AGM to be held on 27-12-2018 and be eligible for re-election as per Articles of Association of the Company.

Ms. Nusrat Mahmud will retire in the AGM to be held on 27-12-2018 and be eligible for re-election as per Articles of Association of the Company.

Name Status No. of Shares held % of holdings

Abdullah Al Mahmud Managing Director 28,975,635 31.82

AHM Mozammel Hoque Chairman 1,837,166 2.02

Salina Mahmud Director 4,809,131 5.28

Nusrat Mahmud Director 4,647,431 5.10

Nabila Mahmud Director 4,647,431 5.10

Farhana Danish Director 1,848,000 2.03

ASM Mijanur Rahman Company Secretary - -

Md. Mushaddeque Ali Chief Financial Officer - -

Md. MarufShahria Head of Internal Audit - -


Mir Azharul Islam Chief Operating Officer 100,000 0.11

Mahmudul Alam Jewel Dy. General Manager 101,000 0.11

Md. Rezaul Haque Dy. General Manager - -

Sharif Mohammad Baree Dy. General Manager - -

Ashok Kumar Das Dy. General Manager - -


Abdullah Al Mahmud Managing Director 28,975,635 31.82

Name No. of Shares held % of holdings

(a) Parent/Subsidiary/Associated Companies and other related parties

Crystal Insurance Co. Ltd. (Common Director) 1,196,100 1.31

(b) Shareholding position:

Directors/ Sponsors 47,132,661 51.76 Institute 24,466,257 26.87 General Public 19,458,394 21.37 Total 91,057,312 100.00

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Brief resume of the Directors:Mrs. Salina Mahmud is a sponsor Director of Hamid Fabrics Limited. She is Managing Director of Hamid Weaving Mills Limited. She is a Director of Tazrian Weaving Mills Limited. She has been involved with the Business Group for more than two decades.

Ms. Nusrat Mahmud is a sponsor Director of Hamid Fabrics Limited. She is also a Director of Hamid Weaving Mills Limited, Tazrian Weaving Mills Limited and Crystal Insurance Company Limited. Ms. Mahmud has been involved with the Business Group after completing her graduation from the USA and master degree from the UK.

(xxv) Appointment of Independent DirectorThe Board of Directors has appointed Dr. M. Waliuzzaman as an Independent Director of Hamid Fabrics Limited with effect from January 24, 2018 to fill in the vacant position for retirement of Syed Anisul Huq. Dr. M. Waliuzzaman has got more than four decades of governance experience, which includes working experiences from Commerce & Industries Ministry, Pakistan; Industrial Development Bank of Pakistan, subsequently Bangladesh Shilpo Bank, now BDBL; East Pakistan Industrial Development Corporation; Bangladesh Petroleum Corporation; Bangladesh Council of Scientific and Industrial Research (BCSIR); Public Administration Reforms Commission (PARC), GoB and visiting Teacher, BUET. He is a Ph.D. from the University of Manchester, UK.

Directors Responsibilities for Financial StatementsThe Financial Statements together with notes thereon have been drawn up in conformity with the Companies Act 1994 and Securities and Exchange Rules 1987. These statements present fairly the Company’s state of affairs, the result of its operation, cash flow and changes in equity.

i) Proper books of accounts of the Company have been maintained.

ii) Appropriate accounting policies have been applied consistently in preparation of the Financial Statements and the accounting estimates are based on reasonable and prudent judgment.

iii) The International Financial Reporting Standard, as applicable in Bangladesh, has been followed in the preparation of the financial statements.

iv) The systems of internal control are sound and have been implemented and monitored effectively.

v) There are no significant doubts upon the Company’s ability to continue as a going concern.

vi) The key operating data and financial data for the last 5 (Five) years stated on page – 16.

Chief Financial Officer, Head of Internal Audit and Company SecretaryThe Company has distributed clearly defined responsibilities to the following positions for smooth functioning of activities of the respective departments:

Chief Financial Officer : Md. Mushaddeque Ali

Head of Internal Audit : Md. Maruf Shahria

Company Secretary : ASM Mijanur Rahman

Credit Rating Credit Rating Agency of Bangladesh Limited (CRAB) has assigned the following ratings to Hamid Fabrics Limited:

AA3 implies that companies rated in this category have very strong capacity to meet financial commitments. These companies have judged to be of very high quality, subject to very low credit risk.

ST – 2 indicates that the degree of safety regarding timely payment on loans/ facilities is strong. The outlook of the Company is projected to be stable.

Long Term Short Term Outlook

AA3 ST - 2 Stable

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Corporate Social Responsibilities

The Company provided financial support to the poor for medical treatment;

The Company provided financial support for performing holy Hajj.

Financial support made to poor and deserving people.

Financial support to the family of deceased persons.

Priority of employment facilities for eligible member of deceased employees’ families.

Auditors

The auditors, M/S Zoha Zaman Kabir Rashid & Co., Chartered Accountants will retire and being eligible and expressed their intention to continue, the Board recommended M/S Zoha Zaman Kabir Rashid & Co., Chartered Accountants for appointment as Auditors of the Company for the year 2018-19.

Professional Firm for compliance of Corporate Governance Code

The Board of Directors has recommended M/S Shafiq Mizan Rahman & Augustine, Chartered Accountants for certification on Corporate Governance Code for the year 2018-19.

The Shareholders are now requested to consider and adopt the annual Financial Statements, Auditors’ report, Directors’ report, etc. for the year 2017-18.

Thanking you.

On behalf of the Board of Directors,

Sd/-AHM Mozammel Hoque Chairman

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Hamid Fabrics Limited (HFL) is one of the leading manufacturers of high quality fabrics in Bangladesh. It is engaged in producing and marketing of gray and finished fabrics of various qualities.

Business outlook of the Company The Company is committed to produce and supply high quality fabrics to the globally reputed buyers. It has got a basket of renowned brand houses for acquiring its fabrics since long. To meet its continued demand of the global buyers, the Company has expanded its capacity recently. With the right leadership and equipped with young, motivated and experienced workforce, the Company is thriving continuously to become a competitive and sustainable one.

Accounting Policies and EstimationThe accounting policies used in preparation of the Financial Statements have been followed consistently. The policies are based on the framework for the preparation and presentation of financial statements issued by the International Accounting Standards Committee (IASC).

Management need to make judgments, estimates and assumptions that affect the application of accounting policies for preparation of financial statements. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances.

Changes in Accounting Policies and EstimationThe estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimated are recognized in the period in which the estimate is revised and in any future periods affected. However, there are no major changes in accounting policies and estimation used in preparation of the Financial Statements during this year.

Comparative Analysis of Financial Results for current Financial Year with immediate preceding five years

MANAGEMENT’S DISCUSSION AND ANALYSIS

Operational Result

Revenue 2,335,482,932 1,322,686,460 1,371,915,641 1,782,564,422 2,198,620,623Gross Profit 646,207,917 408,865,964 412,875,801 463,769,214 662,189,719Operating Profit 365,998,481 218,590,698 219,473,115 231,025,650 463,212,765Net Profit Before Tax 216,697,218 86,944,522 104,732,197 157,872,216 305,583,433Net Profit After Tax 182,840,047 72,057,481 92,146,149 135,565,074 272,587,692

2017-18 (Taka) 2016-17 (Taka) 2015-16 (Taka) 2014-15 (Taka) 2013-14 (Taka)

Financial Position

Non-current Assets 3,337,070,597 3,454,209,997 3,271,077,424 2,094,563,747 1,643,447,142Current Assets 1,869,061,391 1,398,042,498 1,501,891,541 2,287,938,664 1,847,012,120Shareholders’ Equity 3,582,769,264 3,466,367,994 3,460,749,290 3,431,878,166 2,284,661,592Non-current Liabilities 348,440,433 522,464,801 594,078,697 208,251,581 99,041,323Current Liabilities 1,274,922,291 863,419,700 718,140,978 742,372,665 1,106,756,347

Financial RatiosGross Margin ratio 0.28 0.31 0.30 0.26 0.30Net Income ratio 0.08 0.05 0.07 0.08 0.12Return on Assets 0.04 0.01 0.02 0.03 0.08Return on Equity 0.05 0.02 0.03 0.04 0.12Current ratio 1.47 1.62 2.09 3.08 1.67Quick ratio 0.77 0.64 0.92 1.86 1.36Debt-Equity ratio 0.45 0.40 0.38 0.28 0.53EPS 2.01 0.79 1.01 1.80 5.58NAV 39.35 38.07 38.01 39.57 46.78Dividend *C-10% *C-15% *C-15% C-15%,B-5% C-10%,B-10%Number of employees 1287 1098 972 770 938 * Only for general shareholders.

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2017-18 2016-17 2015-16 2014-15

EPS

EPS

37.00

37.50

38.00

38.50

39.00

39.50

40.00

2017-18 2016-17 2015-16 2014-15

NAV

NAV

0

200

400

600

800

1000

1200

1400

-18 -17 - -15

Work force

2017 2016 2015 16 2014

Work force

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Comparison with Peer Industry Hamid Fabrics Limited produces high quality finished fabrics in Bangladesh. It has been added with new plant and machinery during this year. After achieving the output at desired level from the new machinery then we will be able to match our performance with peer industries in our country. It needs some time.

Financial and Economic ScenarioBangladesh has become an example among the developing nations in terms of growth rate and other human indicators. The Country has been maintaining GDP growth rate of more than 6% for many years incessantly and the growth rate is more than 7% in the last year. This year the growth rate is projected to 7.8% by the Government of Bangladesh. Export basket is increasing. Foreign currency reserve is at a comfortable stage. Inflation rate is almost steady for quite some time. The Country can gear up its deveopment pace if the borrowing rate from Banks and Financial Institutions could be reduced to single digit.

The World economy is a bit backlashed by the recent decision of America regarding global trade policy and system. The BREXIT decision is another reason for slow or stagnant situation of the global trade in the European Union. US-China trade war in one hand disrupting normal business trend and on the other hand, it unleashes scopes of doing more business with the developed countries by the developing countries like Bangladesh. Bangladesh also faces competition with some developing countries such as Vietnam, Cambodia and African countries.

The leaders of business community in our country are optimistic to tap the challenge to turn opportunties with proper policy support from the Government of Bangladesh.

Future plan The Company being one of the suppliers of best quality fabrics to the global buyers has revised its capacity level to a new position. To continue supplying with customers’ satisfaction is a real challenge in today’s changing and competitive business environment. Profitability is a major parameter to be sustainable. The Company is devising ways and means to address the fluctuating and increasing costs of primary items like yarn, dyes and chemicals, and overhead costs to remain at its position firm by enhancing efficiency of management, adopting latest technology, recruiting and retaining high skilled workforce for increased productivity in the coming days.

Sd/-Abdullah Al MahmudManaging Director

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Date: October 25, 2018

The Board of Directors Hamid Fabrics LimitedHamid Tower (5th & 6th floor),24 Gulshan C/A, Circle 2, Dhaka 1212.

Subject: Declaration on Financial Statements for the year ended on June 30, 2018.

Dear Sirs,

Pursuant to the condition no. 1 (5) (xxvi) imposed vide Commission’s Notification No. BSEC/CMRRCD/ 2006-158/207/Admin/80 dated 3 June, 2018 under section 2CC of the Securities and Exchange Ordinance, 1969; we do hereby declare that:

(1) The Financial Statements of Hamid Fabrics Limited for the year ended on June 30, 2018 have been preparedin compliance with International Accounting Standards (IAS) or International Financial Reporting Standards (IFRS), as applicable in Bangladesh and any departure therefrom has been adequately disclosed;

(2) The estimates and judgments related to the financial statements were made on a prudent and reasonable basis, in order for the financial statements to reveal a true and fair view;

(3) The form and substance of transactions and the Company’s state of affairs have been reasonable and fairly presented in its financial statements;

(4) To ensure above, the Company has taken proper and adequate care in installing a system of internal control and maintenance of accounting records;

(5) Our internal auditors have conducted periodic audits to provide reasonable assurance that the established policies and procedures of the Company were consistently followed; and

(6) The management’s use of the going concern basis of accounting in preparing the financial statements is appropriate and there exists no material uncertainty related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern.

In this regard, we also certify that -

i) We have reviewed the Financial Statements for the year ended on June 30, 2018 and to the best of ourknowledge and belief:

a. these statements do not contain any materially untrue statements or omit any material fact or containstatements that might be misleading;

b. these statements collectively present a true and fair view of the Company’s affairs and are in compliancewith existing accounting standards and applicable laws.

ii) There are, to the best of our knowledge and belief, no transactions entered into by the Company during the year which are fraudulent, illegal or violation of the code of conduct for the Company’s Board of Directors or its members.

Sincerely yours,

DECLARATION BY CEO AND CFO

Sd/-Abdullah Al Mahmud

Managing Director

Sd/-Md. Mushaddeque AliChief Financial Officer

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The Board of Hamid Fabrics Limited reformed an Audit Committee as sub-committee of the Board. The Audit Committee assists the Board of Directors to ensure its supervisory responsibilities. The Audit Committee comprised of:

Dr. M. Waliuzzaman, Independent Director Chairman

Mrs. Salina Mahmud, Director Member

Ms. Nusrat Mahmud, Director Member

Mr. ASM Mijanur Rahman, Company Secretary Secretary

Role and responsibilities of Audit Committee:

The role and responsibilities of the Audit Committee are clearly stated in the Corporate Governance Guideline issued by Bangladesh Securities and Exchange Commission. The role of the Committee is:

- To oversee the financial reporting process;

- To monitor selection of accounting policies and principles;

- To monitor Internal Audit and Compliance process to ensure adequacy of internal auditing and compliances by reviewing the related reports;

- To oversee hiring and performance of external auditors;

- To hold meeting with external auditors and review the annual financial statements before submission to the Board for approval;

- To review the quarterly and half yearly financial statements before submission to the Board for approval;

- To review the adequacy of internal audit function;

- To review the management’s discussion and analysis before disclosing in the Annual Report;

- To review statement of all related party transactions submitted by the management;

- To review Management Letters/ Letter of Internal Control weakness issued by statutory auditors;

- To oversee determination of audit fees based on scope, magnitude and expertise of the external auditors.

Activities:

The Audit Committee discharged the following responsibilities during the year:

- Reviewed the interim financial statements.

- Reviewed the Company’s draft financial statements for the year ended on June 30, 2018 and recommended that the samebe placed before the Board for approval.

- Reviewed the quarterly financial statements.

- Reviewed hiring and performance of external auditors. - Recommended that the report of the Committee be adopted by the Board for publishing in the Annual Report 2018.

REPORT ON THE ACTIVITIES OF AUDIT COMMITTEEFor the year 2017-18

Sd/-Dr. M. Waliuzzaman Chairman, Audit CommitteeDate: 25.10.2018

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We have examined the compliance status to the Corporate Governance Code by Hamid Fabrics Limited for the year ended on June 30, 2018. This Code relates to the Notification No. BSEC/CMRRCD/ 2006-158/207/Admin/80 dated 3 June, 2018 of the Bangladesh Securities and Exchange Commission.

Such compliance with the Corporate Governance Code is the responsibility of the Company. Our examination was limited to the procedures and implementation thereof as adopted by the Management in ensuring compliance to the conditions of the Corporate Governance Code.

This is a scrutiny and verification and an independent audit on compliance of the conditions of the Corporate Governance Code as well as the provisions of relevant Bangladesh Secretarial Standards (BSS) as adopted by the Institute of Chartered Secretaries of Bangladesh (ICSB) in so far as those standards are not inconsistent with any condition of this Corporate Governance Code.

We state that we have obtained all the information and explanations, which we have required, and after due scrutiny and verification thereof, we report that, in our opinion:

(a) The Company has complied with the conditions of the Corporate Governance Code as stipulated in the above mentioned Corporate Governance Code issued by the Commission;

(b) The Company has complied with the provisions of the relevant Bangladesh Secretarial Standards (BSS) as adopted by the Institute of Chartered Secretaries of Bangladesh (ICSB) as required by this Code;

(c) Proper books and records have been kept by the company as required under the Companies Act 1994, the securities laws and other relevant laws; and

(d) The governance of the company is highly satisfactory.

REPORT TO THE SHAREHOLDERS OF HAMID FABRICS LIMITEDON COMPLIANCE OF CORPORATE GOVERNANCE CODE

Sd/-Shafiq Mizan Rahman & Augustine

Chartered Accountants

Place: DhakaDated: October 30, 2018

Status of compliance with notification of the BSECStatus of compliance with the conditions imposed by the Commission’s Notification No. BSEC/CMRRCD/

2006-158/207/Admin/80 dated 3 June 2018 issued under section 2CC of the Securities and Exchange Ordinance,

1969:

ConditionNo.

Compliance Status(Put √ in the

appropriate column)

Complied

TitleNot

Complied

Remarks

Board size is 08persons

1 Board of Directors

1.1 Board size (number of Board members - minimum 5 and Maximum 20)

1.2 Independent Directors

1.2 (a) At least one fifth (l/5) of the total number of Directors shall be Independent Directors

1.2 (b) Independent Director means a Director:

1.2 (b) (i) who either does not hold any share in the company or holds less than one percent (1%) shares of the total paid-up shares of the company

1.2 (b) (ii) who is not a sponsor of the company and is not connected with the company's any sponsor or director or shareholder who holds one percent (1%) or more shares of the total relationship. His/her family members also should not hold paid-up shares of the company on the basis of family above mentioned shares in the company

1.2 (b)(iii) who has not been an executive of the company immediately preceding 2 (two) financial years

1.2 (b)(v) who is not a member or TREC holder, director or officer of any stock exchange

1.2 (b)(vi) who is not a shareholder, director excepting independent director or officer of any member or TREC holder of stock exchange or an intermediary of the capital market

1.2 (b)(vii) who is not a partner or an executive or was not a partner or an executive during the preceding 3 (three) years of the company's statutory audit firm or audit firm engaged in internal audit or special audit or professional certifying compliance of this Code

1.2 (b)(viii) who is not independent director in more than 5 (five) listed companies

1.2 (b)(ix) who has not been convicted by a court of competent jurisdiction as a defaulter in payment of any loan to a bank or any advance to a Bank or a Non-Bank Financial Institution (NBFI)

1.2 (b) (iv) who does not have any other relationship, whether pecuniary or otherwise, with the company or its subsidiary/associated companies

√

√

√

√

√

√

√

√

√

√

√

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1.2 (b)(x) who has not been convicted for a criminal offence involving moral turpitude

1.2 (c ) The Independent Director(s) shall be appointed by the BoD and approved by the shareholders in the Annual General Meeting (AGM)

1.2 (d) The post of independent director(s) cannot remain vacant for more than 90 (ninety) days

1.2 (e) The tenure of office of an independent director shall be for a period of 3 (three) years, which may be extended for 1 (one) tenure only

1.3 (b)(i – v) Independent Director shall have: a Business Leader/Corporate leader or former official of govt. /statutory/autonomous/ regulatory body in position not below of 5th grade, who has at least bachelor degree in economics or commerce or business studies or University Teacher with Economics or Business Studies or Law background or Professionals like Chartered Accountants, Cost & Management Accountants, Chartered Secretaries and Advocate of High Court division.

1.3 Qualification of Independent Director (ID)

1.3 (a) Independent director shall be a knowledgeable individual with integrity who is able to ensure compliance with financial, regulatory and corporate laws and can make meaningful contribution to the business

1.3 (c ) The independent director shall have at least 10 (ten) years of experiences in any field mentioned above

1.3 (d) In special cases the above qualifications or experiences may be relaxed subject to prior approval of the Commission

1.4 Duality of Chairperson of the Board and Managing Director of Chief Executive Officer

1.4 (a) The positions of the Chairperson of the Board and the MD and or CEO of the company shall be filled by different individuals

1.4 (b) The MD and or CEO of a listed company shall not hold the same position in another listed company

1.4 (c ) The Chairperson of the Board shall be elected from among the non-executive directors of the company

1.4 (e ) In the absence of Chairperson of the Board, the members may elect one of themselves from non-executive directors as Chairperson for that particular Board meeting; the reason of absence of the regular Chairperson shall be duly recorded in the minutes

1.4 (d ) The Board shall clearly define respective roles and responsibilities of the Chairperson and the MD and or CEO

ConditionNo.


appropriate column)

Complied

Title

NotComplied

Remarks

√

√

√

√

√

√

√

√

√

√

√

No suchincidence

N/A

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1.5 The Director's Report shall include the following additional statements:

1.5 (i) Industry outlook and possible future developments in the industry

1.5 (ii) Segment-wise or product-wise performance

1.5 (iii) Risks and concerns

1.5 (iv) A discussion on Cost of Goods sold, Gross Profit Margin and Net Profit Margin

1.5 (v) Discussion on continuity of any Extra-Ordinary gain or loss

1.5 (vi) Basis for related party transactions - a statement of all related party transaction should be disclosed in the annual report

1.5 (vii) Utilization of proceeds from public issues, rights issues and/or through any other instrument

1.5 (viii) An explanation if the financial results deteriorate after the company goes for None Initial Public Offering (IPO)

1.5 (ix) An explanation on any significant variance occurs between Quarterly Financial performance and Annual Financial Statements

1.5 (x) A statement of remuneration paid to directors including independent directors

1.5 (xi) The financial statements present fairly its state of affairs, the result of its operations, cash flows and changes in equity

1.5 (xii) Proper books of account have been maintained

1.5 (xiii) Adoptation of appropriate accounting policies & estimates

1.5 (xv) The system of Internal control is sound in design and has been effectively implemented and monitored

1.5 (xvi) Minority shareholders have been protected and have effective means of redress

1.5 (xvii) Going Concern (ability to continue as going concern)

1.5 (xviii) Highlight and explain significant deviations from the last year’s operating results

1.5 (xix) Key operating and financial data of at least preceding 5(five) years shall be summarized

1.5 (xx) Reason for non-declaration of Dividend

1.5 (xiv) IAS/BAS/IFRS/BFRS, as applicable in Bangladesh, have been followed and adequate disclosure for any departure

ConditionNo.


appropriate column)

Complied

Title

NotComplied

Remarks

√√

√

√

√

√

√

√

√

√

√

√

√

√

√

√

N/A

N/A

N/A

N/A

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1.5 (xxi) No bonus share or stock dividend has been or shall be declared as interim dividend

1.5 (xxii) The number of Board meetings held during the year and attendance by each director

1.5 (xxiii) (a) Parent/Subsidiary/Associated Companies and other related parties

1.5 (xxiii) (c ) Executives ( top five salaried employees other than Directors, CEO, CS, CFO & HIAC)

1.5 (xxiii) (d) Shareholders holding ten percent (10%) or more voting interest in the company

1.5 (xxiv) In case of the appointment/re-appointment of a director, disclose:

1.5 (xxiv) (a) a brief resume of the director

1.5 (xxiv) (b) nature of his/her expertise in specific functional areas

1.5 (xxiv) (c) names of companies in which the person also held the directorship and the membership of committees of the board

1.5 (xxv) Management’s discussion and detailed analysis of the Company’s position and operations signed by CEO or MD:

1.5 (xxv) (a) Accounting policies and estimation

1.5 (xxv) (b) Changes in accounting policies and estimation, if any

1.5 (xxv) (c ) Comparative analysis of financial results for current financial year with immediate preceding five years

1.5 (xxv) (d) Compare such financial results and position with peer industry

1.5 (xxv) (e) Brief explanation on the financial and economic scenario of the country and the globe

1.5 (xxv) (g) Future plan for company’s operation, performance and financial position

1.5 (xxvi) Declaration by the CEO and the CFO to the Board as per 3(3) disclosed under Annexure - A

1.5 (xxvii) This report and certificate regarding compliance of condition of this Code as per condition 9 disclosed under Annexure – B and Annexure – C.

1.5 (xxv) (f) Risks and concerns issues related to the financialstatements with explanation and mitigation plan

1.5 (xxiii) (b) Directors, Chief Executive Officer (CEO). Company Secretary (CS), Chief Financial Officer (CFO), Head of Internal Audit (HIA) and their spouses and minor children

1.5 (xxiii) Pattern of shareholding and name wise details (disclosing aggregate number of shares):

ConditionNo.


appropriate column)

Complied

Title

NotComplied

Remarks

√

√

√

√

√

√

√

√

√

√

√

√

√

√

√

√

√

N/A

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1.6 The Board meeting shall be conducted and minutes of the meeting shall be recorded as per Bangladesh Secretarial Standards (BSS) as adopted by the ICSB.

1.7 (a) A code of conduct prepared by the Board based on the recommendation of the NRC for the Chairperson, other board members and CEO of the Company

1.7 (b) The code of conduct to be posted on the Company that includes prudent conduct and behavior; confidentiality; conflict of interest; compliance with laws, rules and regulations; prohibition of insider trading; relationship with environment, employees, customers and suppliers and independency.

2. Subsidiary Company

2. (a) Provisions relating to the composition of the Board of Directors of the holding company shall be made applicable to the composition of the Board of Directors of the subsidiary company.

2. (b) At least 1 (one) independent director on the Board of Directors of the holding company shall be a director on the Board of Directors of the subsidiary company.

2. (c ) The minutes of the Board meeting of the subsidiary company shall be placed for review at the following Board meeting of the holding company.

2. (d) The minutes of the respective Board meeting of the holding company shall state that they have reviewed the affairs of the subsidiary company also.

3. Managing Director (MD) or Chief Executive Officer (CEO), Chief Financial Officer (CFO), Head of Internal Audit & Compliance (HIAC) and Company Secretary (CS):

3. 1. (a) The Board shall appoint a Managing Director (MD) or Chief Executive Officer (CEO), a Company Secretary (CS), a Chief Financial Officer (CFO), and a Head of Internal Audit and Compliance (HIAC);

3. 1. (b) The positions of the MD or CEO, CS, CFO and HIAC shall be filled by different individuals;

3. 1. (c ) The MD or CEO, CS, CFO and HIAC of a listed company shall not hold any executive position in any other company at the same time;

3. 1. (d) The Board shall clearly define respective roles, responsibilities and duties of the CFO, the HIAC and the CS;

2. (e) The Audit Committee of the holding company shall also review the financial statements, in particular the investments made by the subsidiary company.

ConditionNo.


appropriate column)

Complied

Title

NotComplied

Remarks

√

√

√

√

√

N/A

N/A

N/A

N/A

N/A

To becomplied.

To becomplied.

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3. 1. (e) The MD or CEO, CS, CFO and HIAC shall not be removed from their position without approval of the Board as well as immediate dissemination to the Commission and stock exchange(s).

3.2 The MD or CEO, CS, CFO and HIAC of the Company shall attend the meetings of the Board; provided that the CS, CFO and/ or the HIAC shall not attend such part of a meeting of the Board which involves consideration of an agenda item relating to their personal matters.

3.3 Duties of Managing Director (MD) or Chief Executive Officer (CEO) and Chief Financial Officer (CFO):

3.3. (a) The MD or CEO and CFO shall certify to the Board that they have reviewed financial statements for the year and that to the best of their knowledge and belief:

(i) these statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading;

(ii) these statements together present a true and fair view of the company’s and are in compliance with existing accounting standards and applicable laws;

4. (i) For ensuring good governance in the company, the Board shall have – Audit Committee;

4. (ii) For ensuring good governance in the company, the Board shall have – Nomination and Remuneration Committee;

5 Audit Committee

5.1 Responsibility to the Board of Directors

5.1. (a) The Audit Committee shall be a sub-committee of the Board of Directors (B0D);

5.1. (b) The Audit Committee shall assist the Board in ensuring that the financial statements reflect true and fair view of the state of affairs of the company and in ensuring a good monitoring system within the business;

5.1. (c) The Audit Committee shall be responsible to the Board; the duties of the Audit Committee shall be clearly set forth in writing.

3.3. (c) The certification of the MD or CEO and CFO shall be disclosed in the Annual Report.

3.3. (b) The MD or CEO and CFO shall also certify that there are to the best of knowledge and belief, no transactions entered into by the company during the year which are fraudulent, illegal or in violation of the code of conduct for the company’s Board or its members;

ConditionNo.


appropriate column)

Complied

Title

NotComplied

Remarks

√

√

√

√

√

√

√

√

√

√

To becomplied.

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5.2 Constitution of the Audit Committee

5.2 (a) The Audit Committee shall be composed of at least 3 (three) members;

5.2 (b) The Board shall appoint members of the Audit Committee who shall be non-executive directors of the company except Chairperson of the Board and shall include at least 1 (one) Independent Director;

5.2 (d) Expiration of term of service of the Committee members making the number lower than 3 (three) and fill up the vacancy by the Board not later than one month from the date of vacancy.

5.2 (e) The Company Secretary act as the secretary of the Audit Committee.

5.2 (f) The quorum of the Audit Committee shall not constitute without at least one Independent Director.

5.3 Chairperson of the Audit Committee:

5.3 (a) The Board shall select the Chairperson of the Audit Committee who shall be an Independent Director.

5.3 (b) In the absence of Chairperson of the Audit Committee, the remaining members may elect one of themselves as Chairperson for that particular meeting;

5.3 (c ) Chairman of the Audit Committee shall remain present in the Annual General Meeting (AGM).

5.4 Meeting of the Audit Committee

5.4 (a) The Audit Committee (AC) shall conduct at least four meetings in a financial year;

5.4 (b) The quorum of the meeting of Audit Committee shall be either two members or two third of the members of AC present including an independent director is a must;

5.5 Role of Audit Committee

5.5 (a) Oversee the financial reporting process;

5.5 (b) Monitor choices of accounting policies and principles;

5.5 (c ) Monitor Internal Audit and Compliance process to ensure adequacy;

5.5 (d) Oversee hiring and performance of external auditors;

5.5 (e) Hold meeting with external or statutory Auditors to review the annual financial statements before submission to the board for approval;

5.2 (c ) All members of the Audit Committee should be "financially literate" and at least one member shall have accounting or related financial management experience for ten years;

ConditionNo.


appropriate column)

Complied

Title

NotComplied

Remarks

√

√

√

√

√

√

√√

√

√

√

√

N/A

√

√

√

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N/A

5.5 (f) Review along with the management to review the annual financial statements before submission to the board for approval;

5.5 (g) Review along with the management the quarterly and half yearly financial statements before submission to the board for approval;

5.5 (h) Review the adequacy of internal audit function;

5.5 (i) Review the Management’s discussion and analysis before disclosing in the Annual Report;

5.5 (j) Review statement of all related party transactions submitted by the management;

5.5 (k) Review Management Letters/ Letter of Internal Control weakness issued by statutory auditors;

5.5 (l) Oversee the determination of audit fees based on scope and magnitude, level of expertise deployed and time required for effective audit and evaluate performance of external auditors;

5.5 (m) Oversee whether the proceeds raised through IPO or RPO or Right Share Offer have been utilized as per relevant document or prospectus approved by the Commission.

5.6 Reporting of the Audit Committee:

5.6 (a) Reporting to the Board of Directors:

5.6 (a) (ii) (a) Reporting to the Board on conflicts of interests;

5.7 Reporting to the Shareholders and General Investors through report on activities of the Audit committee signed by its Chairperson disclosing in the Annual Report.

6 Nomination and Remuneration Committee

6.1 Responsibility to the Board of Directors:

5.6 (a) (ii) (b) Reporting to the Board on suspected or presumed fraud or irregularity or material defect identified in the internal audit and compliance process or in the financial statements ;

5.6 (b) Reporting to the Commission on anything has material impact on financial condition and results, if such thing reported to the Board for rectification and such rectification was ignored reasonably, within six months or reports to the Board three times whichever is earlier.

5.6 (a)(i) Reporting to the Board on the activities of the Audit Committee;

ConditionNo.


appropriate column)

Complied

Title

NotComplied

Remarks

√

√

√

√

√

√

√

√

√

No suchincidence

No suchincidence

No suchincidence

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6.1 (a) The Company shall have a Nomination and Remuneration Committee (NRC) as a sub-committee of the Board;

6.1 (b) The NRC shall assist the Board in framing criteria or policy for directors and top level executives as well as policy for considering remuneration of directors, top level executives;

6.1 (c ) Terms of Reference (ToR) of the NRC shall be clearly defined in writing as per condition 6 .5(b).

6.2 Constitution of the NRC:

6.2 (a) The Committee shall comprise of at least three members including an independent director;

6.2 (b) All members of the Committee shall be non-executive directors;

6.2 (c ) Members shall be nominated and appointed by the Board;

6.2 (d) The Board shall have authority to remove and appoint any member of the Committee;

6.2 (e) In case of vacancy (death, resignation, disqualification, or removal), the Board shall fill the vacancy within 180 days of such vacancy;

6.2 (f) The Chairperson of the Committee may appoint or co-opt any external expert and or member of staff as advisor being non-voting member;

6.2 (g) The company secretary shall act as the secretary of the Committee;

6.2 (h) The quorum of the NRC meeting shall not constitute without attendance of at least an independent director;

6.2 (i) No member of the NRC shall receive, either directly or indirectly, any remuneration for any advisory role or otherwise, other than Director’s fees or honorarium from the Company.

6.3 Chairperson of the NRC:

6.3 (a) The Board shall select one person being independent director from the NRC to be Chairperson;

6.3 (b) In the absence of the Chairperson, the remaining members may elect one from themselves as Chairperson for that particular meeting;

6.3 (c ) The Chairperson of the NRC shall attend the annual general meeting (AGM) to answer the queries of the shareholders; any other member from the NRC shall be present at the AGM in case of absence of Chairperson of the NRC.

ConditionNo.


appropriate column)

Complied

Title

NotComplied

Remarks

√

√

√

√

√

√

√

√

√

√

√

To becomplied.

To becomplied.

No suchincidence

N/A

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6.4 Chairperson of the NRC:

6.4 (a) The NRC shall conduct at least one meeting in a financial year;

6.4 (b) The Chairperson may convene any emergency meeting upon request by any member of the NRC;

6.4 (c) The quorum of the meeting shall be constituted in presence of two members or two-third of the members, whichever is higher; where presence of an independent director is must;

6.4 (d) The proceedings of each meeting shall duly be recorded in the minutes and such minutes shall be confirmed in the next meeting of the NRC.

6.5 Role of the NRC:

6.5 (a) NRC shall be independent and responsible or accountable to the Board and to the shareholders;

6.5. (b) NRC shall oversee, among others, the following matters and make report with recommendation to the Board:

6.5. (b) (i) The criteria to determine qualifications, positive attributes and independence of a director and recommend a policy to the Board about remuneration of the directors, top level executive considering -

(a) The level and composition of remuneration is reasonable and sufficient to attract, retain and motivate suitable directors to run the company successfully;

(b) The relationship of remuneration to performance is clear and meets appropriate performance benchmarks; and

(c) Remuneration to directors, top level executive involves a balance between fixed and incentive pay reflecting short and long-term performance objectives;

6.5. (b) (ii) A policy on Board’s diversity considering age, gender, experience, ethnicity, educational background andnationality;

6.5. (b) (iii) Selection of persons who are qualified to be directors and may be appointed in top level executive position as per the criteria and recommend their appointment and removal to the Board;

6.5. (b) (iv) The criteria to evaluate performance of independent directors and the Board;

ConditionNo.


appropriate column)

Complied

Title

NotComplied

Remarks

To becomplied.

To becomplied.

To becomplied.

To becomplied.

To becomplied.

To becomplied.

To becomplied.

To becomplied.

√

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6.5. (b) (v) Identification of Company’s needs for employees and determine their selection, transfer or replacement and promotion criteria;

6.5. (b) (vi) Development, recommendation and review of the Company’s human resources and training policies annually;

6.5. (c ) The Company shall disclose the nomination andremuneration policy and the evaluation criteria and activities of NRC during the year at a glance in its Annual Report.

7 External/Statutory Auditors :

7.1. (i) Non-engagement in appraisal or valuation services or fairness opinions

7.1. (ii) Non-engagement in financial information systems design and implementation

7.1. (iii) Non-engagement in book keeping or other services related to the accounting records or financial statement

7.1. (iv) Non-engagement in broker-dealer services

7.1. (v) Non-engagement in actuarial services

7.1. (vi) Non-engagement in internal audit or special audit services

7.1. (vii) Non-engagement in any other services that the Audit Committee determines;

7.1. (ix) Non-engagement of any other service that creates conflict of interest.

7.2 No partner or employees of the external audit firms shall possess any share of the company during the tenure of their assignment

7.3 Representative of external or statutory auditors shall remain present in the AGM to answer the queries of the shareholders.

8. Maintaining a website by the Company

8.1 The company shall have an official website linked with the website of the stock exchanges.

8.2 The company shall keep the website functional from the date of listing.

8.3 The company shall make available the detailed disclosures on its website as required under the listing regulations of the concerned stock exchanges.

7.1. (viii) Non-engagement of certification services on compliance of Corporate Governance Guidelines as per condition 9(1).

ConditionNo.


appropriate column)

Complied

Title

NotComplied

Remarks

√

√

√

√

√

√

√

√

√

√

√

√

√

√

To becomplied.

To becomplied.

To becomplied.

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9 Reporting and compliance of Corporate Governance

9 .1 The company shall obtain certificate from a practicing Professional Accountant/ Secretary regarding compliance of conditions of Corporate Governance Code of the Commission and include in the Annual Report.

9.2 The professional who will provide the certificate on compliance on this Corporate Governance Code shall be appointed by the shareholders in the AGM.

9.3 The Directors of the Company shall state in the directors' report whether the company has complied with these conditions as per Annexure – C.

ConditionNo.


appropriate column)

Complied

Title

NotComplied

Remarks

√

√

To becomplied.

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INDEPENDENT AUDITOR’S REPORTTO

THE SHAREHOLDERS OF HAMID FABRICS LIMITED

We have audited the accompanying financial statements of Hamid Fabrics Limited (the “Company”) which

comprise the statement of financial position as at 30 June 2018, and the statement of profit or loss and other

comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and

a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance

with Bangladesh Financial Reporting Standards (“BFRS”), the Companies Act 1994, the Securities and Exchange

Rules 1987, and for such internal control as management determines is necessary to enable the preparation of

financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our

audit in accordance with Bangladesh Standards on Auditing. Those standards require that we comply with

relevant ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the

financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the

financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the

risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk

assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the

financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the

purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evalu-

ating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by

management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit

opinion.

Opinion

In our opinion, the financial statements give a true and fair view of the financial position of the Company as at 30

June 2018 and of its financial performance and its cash flows for the year then ended in accordance with Bangladesh

Financial Reporting Standards.

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Report on Other Legal and Regulatory Requirements

In accordance with the Companies Act 1994 and the Securities and Exchange Rules 1987, we also report that:

a) we have obtained all the information and explanations which to the best of our knowledge and belief werenecessary for the purposes of our audit and made due verification thereof;

b) in our opinion, proper books of account as required by law have been kept by the Company so far as it appearedfrom our examination of those books;

c) the Company’s statement of financial position and the statement of profit or loss and other comprehensiveincome together with the annexed notes dealt with by the report agree with the books of account; and

d) the expenditure incurred was for the purposes of the Company’s business.

Sd/- Zoha Zaman Kabir Rashid & Co.Dhaka, October 25, 2018 Chartered Accountants

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ASSETS Non-Current Assets: Property, Plant and Equipment 5 3,304,627,575 3,422,536,810 Intangible Assets 6 1,494,221 1,867,776 Investment 7 30,948,801 29,805,411 3,337,070,597 3,454,209,997 Current Assets: Trade Debtors 8 1,095,256,178 756,967,099 Advances, Deposits and Prepayments 9 222,464,273 119,954,173 Inventories 10 542,206,750 500,088,695 Cash and Cash Equivalents 11 9,134,190 21,032,531 1,869,061,391 1,398,042,498 Total Assets 5,206,131,988 4,852,252,495 EQUITY AND LIABILITIES Shareholders' Equity: Share Capital 12 910,573,120 910,573,120 Share Premium 13 973,600,000 973,600,000 Revaluation Reserves 14 685,427,404 691,473,480 Retained Earnings 15 1,013,168,740 890,721,394 3,582,769,264 3,466,367,994 Non-Current Liabilities: Loans and Borrowings - Net of Current Maturity 16 254,772,264 431,467,147 Lease - Net of Current Maturity 17 1,889,942 5,319,842 Deferred Tax Liabilities 18 49,356,153 48,003,564 Provision for Gratuity 19 42,422,074 37,674,248 348,440,433 522,464,801 Current Liabilities: Loans and Borrowings - Current Maturity 20 208,554,926 168,514,685 Lease - Current Maturity 21 3,759,159 3,386,009 Short Term Loans and Borrowings 22 505,771,478 438,411,390 Trade Creditors 23 337,008,465 81,880,781 Others Payable 24 142,547,886 115,566,633 Income Tax Provision 25 77,280,377 55,660,202 1,274,922,291 863,419,700 Total Shareholders' Equity and Liabilities 5,206,131,988 4,852,252,495

Net Assets Value Per Share 34 39.35 38.07

HAMID FABRICS LIMITEDStatement of Financial Position

As on June 30, 2018

Notes 30-06-2017Amount in Taka

30-06-2018Amount in Taka

The annexed notes form an integral part of these Financial Statements.

Company SecretaryManaging Director

Dhaka, October 25, 2018 Zoha Zaman Kabir Rashid & Co.


Director

Signed as per annexed report of even date.

Sd/- Sd/- Sd/-

Sd/-

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2016-2017Amount in Taka


Notes

Revenue 26 2,335,482,932 1,322,686,460 Cost of Goods Sold 27 (1,689,275,015) (913,820,496)Gross Profit 646,207,917 408,865,964 Operating Expenses Administrative Expenses 28 (243,694,149) (173,596,755)Selling and Distribution Expenses 29 (36,515,287) (16,678,511) (280,209,436) (190,275,266)

Operating Profit 365,998,481 218,590,698 Finance Costs 30 (139,935,748) (131,957,966)Contribution to WPPF 31 (10,834,861) (4,347,226) (150,770,609) (136,305,192) 215,227,872 82,285,506 Non-Operating Income 32 1,469,346 4,659,016 Net Profit Before Tax 216,697,218 86,944,522

Income Tax Provision Provision for Current Tax 25 (32,504,583) (13,041,678)Provision for Deferred Tax 18 (1,352,588) (1,845,363) (33,857,171) (14,887,041)

Net Profit for the Year 182,840,047 72,057,481

Other Comprehensive Income Extra Ordinary Items - - Total Comprehensive Income for the Year 182,840,047 72,057,481 Basic Earning Per Share (Par value Tk.10/=) 33 2.01 0.79

HAMID FABRICS LIMITEDStatement of Profit or Loss and Other Comprehensive Income

For the year ended June 30, 2018





Director


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Sd/-

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Particulars

Amount in Taka

Amount in Taka

ShareCapital

Share PremiumAccount

RevaluationReserve

RetainedEarnings

TotalTaka

ParticularsShare

CapitalShare Premium

Account Revaluation

ReserveRetainedEarnings

TotalTaka

Balance as at July 01, 2017 910,573,120 973,600,000 691,473,480 890,721,394 3,466,367,994

Profit for the year - - - 182,840,047 182,840,047

Cash Dividend for 2016-2017 (66,438,777) (66,438,777)

Depreciation adjustment of Revaluation Assets (6,046,076) 6,046,076 -

Balance as at June 30, 2018 910,573,120 973,600,000 685,427,404 1,013,168,740 3,582,769,264

HAMID FABRICS LIMITEDStatement of Changes in Equity

As on June 30, 2018

Balance as at July 01, 2016 910,573,120 973,600,000 697,837,771 878,738,399 3,460,749,290

Profit for the year - - - 72,057,481 72,057,481

Cash Dividend for 2015-2016 (66,438,777) (66,438,777)

Depreciation adjustment of Revaluation Assets (6,364,291) 6,364,291 -

Balance as at June 30, 2017 910,573,120 973,600,000 691,473,480 890,721,394 3,466,367,994

Statement of Changes in Equity As on June 30, 2017

Net Assets Value Per Share as on 30-06-2018 (Note - 34) 39.35 Net Assets Value Per Share as on 30-06-2017 (Note - 34) 38.07





Director


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Cash Flows from Operating Activities Cash Receipts from Customers 1,998,663,199 1,461,337,745 Cash Paid to Suppliers and Employees (1,678,610,691) (1,113,426,825) Cash Generated from Operations 320,052,508 347,910,920 Income Tax Paid (17,556,304) (10,884,408) Interest Paid (148,874,788) (131,844,646)Net Cash Flows from Operating Activities 153,621,416 205,181,866 Cash Flows from Investing Activities Acquisition of Property, Plant and Equipment (25,686,286) (255,338,531) Disposal of Property, Plant and Equipment 100,000 5,450,000 (Addition)/Realisation of Investment (FDR) (1,143,390) (952,710)Net Cash Flows from Investing Activities (26,729,676) (250,841,241) Cash Flows from Financing Activities (Decrease)/Increase in Long Term Borrowings (139,711,392) (39,436,259) Increase in Short Term Borrowing 505,771,478 438,411,390 (Decrease) in Short Term Borrowing (438,411,390) (292,246,067) Dividend Paid (66,438,777) (66,438,777)Net Cash Flows from Financing Activities (138,790,081) 40,290,287 Net Cash Flows from Operating, Investing & Financing Activities (11,898,341) (5,369,088) Opening Cash and Cash Equivalent 21,032,531 26,401,619 Closing Cash and Cash Equivalent 9,134,190 21,032,531 Net Operating Cash Flow per Share 1.69 2.25

HAMID FABRICS LIMITEDStatement of Cash Flows








Director


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HAMID FABRICS LIMITEDNotes to the Financial Statements


SIGNIFICANT ACCOUNTING POLICIES AND OTHER MATERIAL INFORMATION

1. Status of the Reporting Entity

1.1. Legal Status:Hamid Fabrics Ltd. (the “Company”) is a public company limited by shares. The Company was incorporated in Bangladesh on 27 April 1995 in the name of Siddique Fabrics Ltd., as a private company limited by shares under the Companies Act, 1994. Subsequently on 23 May 2000, the name was changed to Hami’d Fabrics Limited. The Company was converted to public company on 25 February 2010 vide special resolution passed in the extra ordinary general meeting after observance of required formalities. The Registered office of the Company is situated at Hamid Tower, 24 Gulshan Commercial Area, Circle – 2, Dhaka – 1212. The factory of the Company is located at Shilmondi, Narshindi. The Company got BSEC’s approval for issuance of 30 million Ordinary shares of Tk.10.00 each at an issue price of Tk.35.00 each through IPO. The Company is listed with Dhaka stock exchange and Chittagong stock exchange.

1.2. Nature of business

The Principal activity of this Company is engaged in manufacturing and marketing of gray and finished fabrics of various qualities.

The management of the company will continue its operational existence for the foreseeable future on the basis of improved profitability and continued support of its bankers, equipment vendors and other contractors, suppliers as well as related stakeholders.

2. Basis of Preparation:

2.1. Statement of ComplianceThe financial statements have been prepared in accordance with the International Accounting Stand-ards (IASs) and International Financial Reporting Standards (IFRSs) as adopted by the Institute of Chartered Accountants of Bangladesh as Bangladesh Accounting Standards (BASs) and Bangladesh Financial Reporting Standards (BFRSs).

2.2. Other Regulatory CompliancesThe company is also required to comply with the following major laws and regulation in addition to the Companies Act 1994:

The Income Tax Ordinance 1984 The Income Tax Rules 1984 The Value Added Tax Act 1991 The Value Added Tax Rules 1991 The Customs Act 1969 Bangladesh Labor Law 2006 Securities and Exchange Rules 1987 along with all related regulations Other applicable regulations.

2.3. Measurement bases used in Preparing the Financial StatementsThe financial statements have been prepared on a Going Concern basis. Except the carrying value of Lands and Buildings which are measured at fair value, the financial statements have been prepared on "Historical Cost" convention basis, which is one of the most commonly adopted bases provided in "the framework for the preparation and presentation of financial statements" issued by the International Accounting Standard Committee (IASC).

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2.4. Going ConcernThe Company has adequate resources to continue in operation for foreseeable future. For this reason, the Directors continued to adopt going concern basis in preparing the Financial Statements. The current credit facilities and resources of the company provide sufficient fund to meet the present requirements of its existing businesses and operations.

2.5. Use of estimates and judgmentsThe preparation of financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised and in any future periods affected. In particular, information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements are reflected in measuring fair value of Land and Building, calculation of deferred tax liabilities and gratuity provision.

2.6. Functional and presentational currency and level of precisionThe financial statements are prepared and presented in Bangladesh Currency (Taka), which is the company’s functional currency. All financial information presented has been rounded off to the nearest Taka except where indicated otherwise.

2.7. Reporting periodThe financial period of the company covers one year from 1 July to 30 June and followed consistently. For this Report, Financial Statement covers for the period from July 01, 2017 to June 30, 2018 along with related applicable comparative information.

2.8. Change in Accounting Policy There is no major change in accounting policies for preparation of the Financial Statements for this year.

2.9. Date of Authorization:This Financial Statements has been authorized for publication by the Board of Directors of Hamid FabricsLimited on 25-10-2018.

2.10. Components of the Financial StatementsAccording to the International Accounting Standard (IAS) 1 as adopted by ICAB as BAS 1 "Presentation of Financial Statements" the complete set of financial statements includes the following components: i) Statement of Financial Position ii) Statement of Profit or loss and other Comprehensive Income iii) Statement of Changes in Equity iv) Statement of Cash Flows v) Notes to the Financial Statements

3. Principal Accounting Policies: The accounting policies set out below have been applied in preparations of these financial statements:

3.1. Property, Plant and Equipment

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3.1.1. Recognition and Measurement Property, plant and equipment except land and building are measured at cost less accumulated depreciation and impairment losses, if any. Land and building are measured at fair value. The cost of an item of property, plant and equipment comprises its purchase price and any directly attributable expenses, inward freight, duties and non-refundable taxes.

Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment.

The Company recognizes in the carrying amount of an item of property, plant and equipment the cost of replacing part of such an item when that cost is incurred if it is probable that the future economic benefits embodied within the item will flow to the entity and the cost of the item can be measured reliably. All other costs are recognized in the income statement as an expense as incurred.

3.1.2. Disposal of Fixed AssetsOn disposal of fixed assets, the cost and accumulated depreciation are eliminated and gain or loss on such disposal is reflected in the income statement, which is determined with reference to the net book value of the assets and net sales proceeds.

3.1.3. Depreciation on Fixed AssetsDepreciation on fixed assets is charged on reducing balance method. Depreciation continues to be charged on each item of fixed assets until the written down value of such fixed assets is reduced to Taka one. Depreciation on addition to fixed assets is charged on daily product basis from the date of acquisition and depreciation has been charged on fixed assets ceases on the same way of their date of disposal and it has no significant impact on the previous financial statements relating to such change from yearly basis and days basis. The residual value, if not insignificant, is reassessed annually. Amount of depreciation on Revaluation of Building & Other Construction has been adjusted against Revaluation Reserve.

Rates of depreciation on various classes of fixed assets are as under:

Land is not depreciated as it deems to have an infinite life. Depreciation is charged on all assets of thecompany.

3.1.4. Revaluation:During the period no assets were revalued but it was estimated that fair value of above assets justified with was higher than the book value.

3.1.5. Subsequent CostsThe cost of replacing part of an item of property, plant and equipment is recognized in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the company and its cost can be measured reliably. The costs of the day-to-day servicing of property, plant and equipment are recognized in the profit and loss account as incurred.

3.1.6. Impairment of AssetsNo fact and circumstances indicate that company's assets including property, plant and equipment may be impaired

Category of fixed asset Rate (%)

Building & Construction 5 Plant & Machinery 5 Electrical & Gas Installation 10 Furniture and Fixtures 15 Office equipment 15 Vehicles 20

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3.2. Intangible Asset

3.2.1 Recognition and measurementIntangible assets are measured at cost less accumulated amortization and accumulated impairment loss, if any. Intangible asset is recognized when all the conditions for recognition as per BAS 38: Intangible assets are met. The cost of an intangible asset comprises its purchase price, import duties and non-refundable taxes and any directly attributable cost of preparing the asset for its intended use.

3.2.2 Subsequent expenditureSubsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditures are recognized in the profit and loss account when incurred.

3.2.3 AmortizationAmortization is recognized in the statement of comprehensive income on reducing balance method. Amortization rate for intangible assets (computer software) is 20 % per year.

3.3 Leased AssetsLeases in terms of which the company assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition these leased assets are measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.

3.4 Investment in FDRInvestment in FDR includes fixed deposits held with various banking and non-banking financial institu-tions in the name of Hamid Fabrics Limited. The fixed deposits are renewed upon maturity at the option of the company.

3.5 InventoriesInventories are stated at the lower of cost and net realizable value in accordance with BAS -2 “Inventories”. The cost of inventories is based weighted average principle and includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition.

Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. Adequate allowance is made for obsolete, damaged and slow-moving inventories.

3.6 Trade DebtorsAccounts receivable has been stated at its original invoiced amount supported by L/C. This is considered good and is falling due within one year. 25% provision for bad/doubtful debts is made on the receivable amount against trade debtors over one year to two years of aging and over two years of aging 50% provi-sion is made and if its three years or more 100% is provided. Related party transactions relating to sales/purchase are made on arm length basis. Rate of sale/purchase of related party transactions are fixed as applicable to other outsider parties.

3.7 Advance, Deposits and PrepaymentsAdvances are initially measured at cost. After initial recognition advances are carried at cost less deduc-tions, adjustments or charges to other account heads such as PPE or inventory etc.

Deposits are measured at payment value.

Prepayments are initially measured at cost. After initial recognition prepayments are carried at cost less charges to profit and loss account.

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3.8 Cash and Cash EquivalentsCash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repay-able on demand and form an integral part of the entity’s cash management are included as a compo-nent of cash and cash equivalents for the purpose of the statement of cash flows. Amount of Cash and Cash Equivalent under USD has been reflected in BDT and exchange rate fluctuation has been recog-nized accordingly.

3.9 Other Current AssetsOther current assets have a value on realization in the ordinary course of the company's business which is at least equal to the amount at which they are stated in the balance sheet.

3.10 Share CapitalOrdinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognized as deduction from equity, net of any tax effects. Paid up capital represents total amount contributed by the shareholders and bonus shares, if any issued by the company to the ordinary shareholders. Holders of ordinary shares are entitled to receive dividend as declared from time and are entitled to vote at shareholders meetings. In the event of a winding up of a winding up of the company, ordinary shareholders rank after all other shareholders and creditors and fully entitled to any residual proceeds of liquidation.

3.11 Trade Creditors and AccrualsTrade and other payables are stated at cost.

A provision is recognized in the balance sheet when the Company has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Trade Creditors under foreign currency has been presented in BDT and fluctuation loss has been charged to Profit and Loss Account.

3.12. Loans and Borrowing Principal amounts of loans and borrowings are stated at their outstanding amount. Borrowings repay-able after twelve months from the reporting date are classified as non-current liabilities whereas the portion payable within twelve months, unpaid interest and other charges are classified as current liabilities.

3.13. Revenue RecognitionRevenue from the sale of goods is measured at the fair value of the consideration received or receiv-able, net of returns and allowances, trade discounts and volume rebates. Revenue is recognized when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably as provided in BAS 18 “Revenue” and there is no continuing management involvement with the goods. The timing of the transfer of risk and rewards depends on the individual terms of the sales agreement. Normally, revenue is recognized when the fabrics is supplied to the buyer or its agents. Scrape and wastage sales are now included as part of revenue.

3.14 Foreign ExchangeTransactions in foreign currencies are translated at the average rate of the month. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to Bangladesh Taka at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translate on are recognized in the income statement in accordance with BAS 21 “The effects of Changes in Foreign Currency Rates.”

3.15 Employee Retirement Benefits

Defined Contribution PlanObligations for the Company’s contributions to defined contribution plans (provident fund and Work-ers Profit Participation Fund) are recognized as an expense in the income statement as incurred.

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Defined Benefit PlanThe Company operates an unfunded Gratuity Scheme which is considered as Defined Benefit Plan. The present value of the obligation for a defined benefit plan is measured using the Projected Unit Credit method. As the Gratuity Scheme is fairly new and the numbers of staffs, who have completed the required service qualification period of five years, are limited, no professional actuarial assessment of the Gratuity obligation is performed at Reporting Date. However, based on the review of undis-counted value of the present gratuity obligation Management is confident that the actuarial assess-ment will not result in any significant difference with the gratuity provision recorded.

3.16 Finance Income and ExpensesFinance income comprises interest income on funds invested. Interest income is recognized on maturity.

Finance expenses comprise interest expenses on loan, overdraft and bank charges. All borrowing costs are recognized in the Statement of Profit or loss and other Comprehensive Income using effective interest method except to the extent that they are capitalized during constructions period of the plants in accordance with BAS-23 Borrowing cost.

3.17 Earnings Per Share (EPS)The Company calculates Earning per Share (EPS) in accordance with BAS 33: Earning per Share, which has been shown on the face of Statement of Comprehensive Income account, and the computation of EPS is stated in related note.

Basic earnings This represents earnings for the year attributable to ordinary shareholders. As there was no preference dividend, minority or extra ordinary items, the net profit after tax for the year has been considered as fully attributable to the ordinary shareholders.

Weighted average number of ordinary shares outstanding during the yearThis represents the number of ordinary shares outstanding at the beginning of the year plus the number of shares issued during the year multiplied by a time-weighting factor. The time weighting factor is the numbers of days the specific shares are outstanding as a proportion of the total number of days in the year.

Basic earnings per shareThis has been calculated by dividing the basic earnings by the weighted average number of ordinary shares outstanding for the year.

Diluted/restated earnings per shareIn case of issuing bonus share the Company dilute the prior period’s financial statement accordingly.

3.18. Cash flows statementCash Flow Statement is prepared in accordance with BAS 7 “Cash Flow Statement”. The cash flow from the operating activities have been presented under Direct Method as prescribed by the Securities and Exchange Rules 1987 and considering the provisions of Paragraph 18(a) of BAS-7 which provides that “Enterprises are encouraged to report Cash Flow from Operating Activities using the Direct Method”.

3.19 Responsibility for Preparation and Presentation of Financial Statements:The Management is responsible for the preparation and presentation of Financial Statements under section 183 of the Companies Act, 1994 and as per the Provision of “The Framework for the preparation and presentation of Financial Statements” issued by the International Accounting Standard Board (IASB) as adopted by the Institute of The Chartered Accountants of Bangladesh (ICAB).

3.20 Risk and uncertainties for the use of estimates in preparing financial statements Preparation of Financial Statements in conformity with the Bangladesh Accounting Standards requires management to make estimates and assumption that effect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statement and revenues and expenses during the period reported. Actual result could differ from those estimates. Estimates are used for accounting of certain items such as depreciation and amortization, taxes, reserves and contingencies.

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3.21. Comparative AmountsCertain comparative amounts have been re-classified & rearranged to confirm with the current year's presentation.

3.22. Event after the reporting periodEvents after the reporting period that provide additional information about the company’s positions at the balance sheet date are reflected in the financial statements if any. The Board of Directors in its meeting held on October 25, 2018 recommended 10% cash dividend for the year ended June 30, 2018 for general shareholders only.

3.23 Related Party TransactionsThe objective of Related Party Disclosure IAS 24 is to ensure that an entity's financial statements contain the disclosures necessary to draw attention to the possibility that its financial position and profit or loss may have been affected by the existence of related parties and by transactions and outstanding balances with such parties. Parties are considered to be related if one party has the ability to control the other party or to exercise significant influence or joint control over the other party in making financial and operating decisions.The Company transacts with related parties and recognize as per BAS 24 'Related Party Disclosures'. Related party transactions have been disclosed under Note – 35.

3.24. Contingent Liabilities and AssetsContingent liabilities and assets are current or possible obligations or assets, arising from past events and whose existence is due to the occurrence or non-occurrence of one or more uncertain future events which are not within the control of the company. No contingent liabilities and assets were recognized in the financial statements for the year as no such event existed.

3.25. Segment reportingThe Company has three interdependent units such as weaving, yearn dyeing and finishing units. These are process units of its finished products i.e. finished fabrics of different qualities. No price is available for its intermediate product and it is also not saleable. So, Segment reporting is not applica-ble for the company.

4. Taxation

4.1. Income taxIncome tax on the profit or loss for the year comprises current and deferred tax. Income tax is recog-nized in the income statement except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Provision for corporate income tax is made @ 15% on estimated taxable profit in accordance with the income tax laws. The corporate income tax assessment of the Company is completed up to the assess-ment year 2017-2018 (accounting year ended 30 June 2017) and tax liability is settled in full.

4.2 Deferred Tax Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit. The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted or sub-attentively enacted at the reporting date.

A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

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5 Property, Plant and Equipment Land & Land Development 855,709,891 855,709,891 Building & Construction 653,853,147 675,926,440 Plant & Machinery 1,589,513,831 1,668,260,438 Vehicles 17,287,625 21,689,526 Electricity Installation 95,809,090 97,801,502 Gas Line Installation 14,082,114 15,646,793 Office Equipment 45,360,877 51,069,114 Furniture & Fixtures 11,916,557 12,863,190 Capital Work in Progress 21,094,443 23,569,918 3,304,627,575 3,422,536,810

Capital Work-in-progress represents Building & Construction Tk. 1,81,01,292 and Plant & Machinery Tk. 29,93,151 of the Company on which no depreciation was charged.

For further details please refer to Annexure-A

The aforesaid assets of the company are mortgaged with various banks and financial institutions tosecure different current and long-term loans and borrowings.

6 Intangible Assets Cost 5,700,000 5,700,000 Less: Accumulated amortization (4,205,779) (3,832,224) This amount represent the value of Computer Software. 1,494,221 1,867,776

7 Investment Security Deposit against Titas Gas 13,904,388 13,387,844 Lien against Loan 17,044,413 16,417,567 30,948,801 29,805,411 Security Deposit against Titas Gas Janata Bank Limited (Lien to Titas Gas) - Unit-1 3,215,796 3,090,381 Janata Bank Limited (Lien to Titas Gas) - Unit-2 10,688,592 10,297,463 13,904,388 13,387,844 Lien against Loan Janata Bank Limited (Lien against SOD Loan) 16,648,349 16,038,149 Bank Asia Limited (Lien against Term Loan) 396,064 379,418 17,044,413 16,417,567

8 Trade Debtors 1,095,256,178 756,967,099

Receivable amount against Trade Debtors has been reflected in BDT and exchange rate fluctuation hasbeen recognised accordingly. The above amount is considered good and secured by Letter of Credit (L/C).

For further details please refer to Annexure-B

8.01 Age Analysis of Trade Debtors Less than 06 months 1,095,256,178 729,270,854 More than 06 months - 27,696,245 1,095,256,178 756,967,099

No amount was due by the Director (including Managing Director), Managing Agent, Manager & other Officers of the Company and any of them severally or jointly with any other person.

Management considered the trade debts are collectable, however an amount of Tk. 1,34,04,623 has been kept as provision for doubtful debts for this year against which last year's amount was Tk. 44,68,207

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Trade Debtors includes Tk. 12,22,00,650 and 16,57,85,947 due from Hamid Weaving Mills Limited and Tazrian Weaving Mills Ltd. respectivelly, which are related party transaction against Tk. 22,92,57,367 and Tk. 10,68,36,578 on 30-06-2017 which has been done on arm length basis. The said amount is considered good and secured by Letter of Credit (L/C). Additional discloser also give in Note - 35.

9 Advances, Deposits and Prepayments Advances 70,410,701 56,582,634 Security Deposits 11,265,801 10,733,888 FC Deposit with Banks 140,787,771 52,637,651 222,464,273 119,954,173 Advances: Salary (Head Office) 1,781,900 2,780,400 Advance against Salary (Factory) 788,260 995,800 Advance against ERP 43,770,254 38,996,584 Advance against Expenses 1,816,915 1,210,090 Tax Deduction at Source 17,556,304 10,884,408 Prepaid Insurance 3,466,460 1,397,323 Advance against Services 1,230,608 318,029 70,410,701 56,582,634 Security Deposits: Titas Gas Transmission Co Ltd. 4,987,459 4,987,459 Rural Electrification Board (REB) 4,476,657 3,944,744 Bank Guarantee margin - Titas Gas 1,764,685 1,764,685 Gas Cylinder 32,000 32,000 Mobile Company 5,000 5,000 11,265,801 10,733,888 FC Deposit with Bank:

BTB L/C Deposit - Janata Bank Limited 58,707,693 14,821,515 Sundry Deposit - Janata Bank Limited 10,296,551 12,355,025 Foreign Currency Held for BTB L/C - Prime Bank Limited - 7,474 Foreign Currency Held for BTB L/C - Bank Asia Limited 59,330,799 17,994,646 Foreign Currency Held for BTB L/C - UCBL 12,452,728 7,458,990 140,787,771 52,637,651

i) All advances and deposits amount are considered good and recoverable. ii) There is no amount due from directors or officers of the Company other than Advance Against Salary &

Expenses to the employees.

10 Inventories Yarn 111,695,320 63,098,160 Work In Process - Yarn 4,570,280 7,061,205 Finished Fabrics 25,204,320 5,104,533 Gray Fabrics 93,202,785 100,133,701 Spare Parts 72,679,507 60,760,630 Chemicals 61,939,574 75,957,249 Dyes 103,943,690 77,314,574 Work In Process Finished Goods 59,053,824 107,447,967 Lubricant 283,020 278,400 WTP Materials 425,500 501,366 Packing Materials 390,681 372,857 Store in Transit 8,818,249 2,058,053 542,206,750 500,088,695

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A) The above inventories are as per physical checking made, valued and certified by inventory team consists of management staff and Auditors.

B) Inventories in hand have been valued at lower of cost and net realizable value.

C) Quantitative reconciliation shown in Annexure - D.

11 Cash and Cash Equivalent Cash in Hand 230,283 287,195 Cash at Bank 8,903,907 20,745,336 9,134,190 21,032,531 Cash in Hand Head Office 3,357 119,794 Factory 196,926 137,401 Petty Cash (Imprest) 30,000 30,000 230,283 287,195 Cash at Banks Janata Bank 763,495 84,018 United commercial Bank Limited 1,674,818 4,209,430 Prime Bank 2,714,597 3,355,543 Brac Bank 9,114 23,625 Bank Asia 2,528,688 7,994,925 South Bangla Agriculture & Commerce bank Ltd. 1,213,195 5,077,795 8,903,907 20,745,336

Amount of Cash and Cash Equivalent under USD has been reflected in BDT and exchange rate fluctuationhas been recognised accordingly.

12 Share Capital Authorised Share Capital 200,000,000 Ordinary Shares of Tk. 10 each. 2,000,000,000 2,000,000,000

Issued and Paid Up Capital 910,573,120 910,573,120

91,057,312 Ordinary Shares of Tk. 10 each. The composition of the share capital of the Company is as follows:

Name No. of Shares % 30-06-2018 30-06-2017 Mr. Abdullah Al-Mahmud 28,975,635 31.82% 289,756,350 289,756,350 Mr. A. H. M. Mozammel Hoque 1,837,166 2.02% 18,371,660 18,371,660 Ms. Salina Mahmud 4,809,131 5.28% 48,091,310 48,091,310 Ms. Nusrat Mahmud 4,647,431 5.10% 46,474,310 46,474,310 Ms. Nabila Mahmud 4,647,431 5.10% 46,474,310 46,474,310 Ms. Farhana Danish 1,848,000 2.03% 18,480,000 18,480,000 Other Shareholders 44,292,518 48.64% 442,925,180 442,925,180 91,057,312 100% 910,573,120 910,573,120

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13 Share Premium Account 973,600,000 973,600,000

This is related to Pre-IPO and IPO share issue as per approval of the regulatory authorities.

14 Revaluation Reserve Assets Revaluation Reserve- Opening balance 691,473,480 697,837,771 Depreciation adjustment of Revaluation Assets (6,046,076) (6,364,291) No asset was revalued during the the year. 685,427,404 691,473,480

15 Retained Earnings Opening balance 890,721,394 878,738,399 Cash Dividend (66,438,777) (66,438,777) Depreciation adjustment of Revaluation Assets 6,046,076 6,364,291 Profit for the year 182,840,047 72,057,481 Closing Balance 1,013,168,740 890,721,394

16 Loans & Borrowings-Net off Current Maturity The portion of Long term loans which is repayable after twelve months from the balance sheet date. UCB Term loan - against acquisition of Property 16.01 28,821,643 59,474,514 UCB Term loan - 01 16.02 16,291,768 26,514,075 UCB Term loan - 02 16.03 196,865,346 316,286,176 BA Term loan - 01 16.04 4,022,191 10,086,770 BA Term loan - 02 16.04 8,771,316 19,105,612 254,772,264 431,467,147

16.01 The loan of Tk. 11,93,00,000 was taken from United Commercial Bank, Foreign Exchange Branch, Dhakaon August 30, 2014 for acquisition of property. This Term Loan is secured by Mortgage of the Land, Personal Guarantee of all Directors and creation of First Charge on fixed and floating assets. The grace period of the loan is one year. The rate of interest has been reduced to @11% per annum. The loan is payable by 60 monthly Installment of Tk. 27,93,325.90 each, including interest, started from September 30, 2015. An amount of Tk. 3,91,87,592 shown under the head "Loans & Borrowing - Current Maturity " Note-20.

16.02 The loan of Tk. 3,95,85,000 was taken from United Commercial Bank, Foreign Exchange Branch, Dhakaagainst a Term Loan sanctioned for import of a Biological ETP Machinery. The rate of interest has been reduced to @11% per annum. The loan is payable by 54 monthly Installment of Tk. 9,82,825.02 each, including interest, starting from July 31, 2016. An amount of Tk. 1,11,59,332 shown under the head "Loans & Borrowing - Current Maturity " Note-20.

Less than 500 12,930 2.77% 2,522,364 500 to 5,000 1,110 2.20% 2,001,784 5,001 to 10,000 188 1.60% 1,458,794 10,001 to 20,000 89 1.40% 1,274,601 20,001 to 30,000 37 1.04% 945,189 30,001 to 40,000 17 0.68% 616,774 40,001 to 50,000 24 1.23% 1,124,629 50,001 to 100,000 39 3.05% 2,779,270 100,001 to 1,000,000 45 16.64% 15,151,589 Above 1,000,000 13 69.39% 63,182,318 14,492 100% 91,057,312

ShareNo. of SharesSh. holders %

Total No.of Shares

Shareholding status as on June 30, 2018

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Carrying Amount inBalance Sheet

Tax Base Taxable/(Deductible)

Temporary Difference

16.03 The loan of Tk. 44,66,34,850.50 was taken from United Commercial Bank, Foreign Exchange Branch,Dhaka against a Term Loan sanctioned for import of Capital Machinery. This Term Loan is secured by hypothecation of the machineries. The grace period of the loan is one year. The rate of interest has been reduced to @11% per annum. The loan is payable by 60 monthly Installment of Tk. 1,09,91,063 each, including interest, starting from May 31, 2016. An amount of Tk. 14,42,75,811 shown under the head "Loans & Borrowing - Current Maturity " Note-20.

16.04 These loans of Tk. 2,42,00,000 and Tk. 95,00,000 was taken from Bank Asia, Principal Office Branch, Dhakaagainst Term Loan sanctioned for installation of a ERP System. The rate of interest is @11% per annum of each. Both loans are payable by 36 monthly equal Installment. An amount of Tk. 1,39,32,191 shown under the head "Loans & Borrowing - Current Maturity " Note-20.

17 Lease - Net off Current Maturity The portion of Lease which is repayable within twelve months from the balance sheet date Bank Asia - Transport Loan 1,889,942 5,319,842 Details of the Leasehold Assets shown seperately in Annexure - A.

18 Deferred Tax Liabilities/(Assets) 30-Jun-18 Property, Plant and Equipment - assets 2,125,569,414 1,755,600,542 369,968,872 Intangible Assets (Computer Software) 1,494,221 - 1,494,221 Gratuity Provision (42,422,074) - (42,422,074) 2,084,641,561 1,755,600,542 329,041,019 Applicable rate 15% Deferred Tax Liability-(A) 49,356,153

30-Jun-17 Property, Plant and Equipment 2,246,565,805 1,890,735,567 355,830,238 Intangible Assets (Computer Software) 1,867,776 - 1,867,776 Gratuity Provision (37,674,248) - (37,674,248) 2,210,759,333 1,890,735,567 320,023,766 Applicable rate 15% Deferred Tax Liability-(B) 48,003,565

Net increase/ (Decrease) in deferred tax liabity (A-B) 1,352,588

19 Provision for Gratuity Opening Balance 37,674,248 32,673,956 Provision for the year 6,504,360 5,449,634 Less : paid during year (1,756,534) (449,342) 42,422,074 37,674,248 20 Loans & Borrowing - Current Maturity The portion of long term loans which is repayable within twelve months from the balance sheet date

UCB Term loan - against acquisition of Property 16.01 39,187,592 35,435,386 UCB Term loan - 01 16.02 11,159,332 10,039,710 UCB Term loan - 02 16.03 144,275,811 123,039,589 BA Term loan - 01 16.04 3,745,568 - BA Term loan - 02 16.04 10,186,623 - 208,554,926 168,514,685

21 Lease - Current Maturity The portion of Lease which is repayable within twelve months from the balance sheet date:

Bank Asia - Transport Loan 3,759,159 3,386,009

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22 Short Term Loans & Borrowings Janata Bank Limited Limited - CCH 20,138,311 21,237,760 Janata Bank Limited CC (Hypo) A/C# 0958 41,215,242 39,167,004 Janata Bank Limited CC (Pledge) A/C# 0966 61,654,043 61,245,013 Bank Asia Limited O/D A/C # 2721 30,751,357 30,694,224 United Commercial Bank Limited O/D 82,262,207 80,385,601 United Commercial Bank Limited LTR A/C 747,788 - United Commercial Bank Limited - Bills Discounted 106,011,520 98,288,416 Bank Asia Limited - Bill Discounted 107,295,219 50,969,947 Bank Asia Limited PC A/C 9,382,101 11,178,327 Bank Asia Limited LTR A/C 40,476,684 25,306,809 Janata Bank Limited - Cash Incentive loan - 1,000,000 United Commercial Bank Limited - Cash Incentive loan 3,981,737 1,384,571 Bank Asia Limited - Cash Incentive loan 1,855,269 4,199,553 Bank Asia Limited - Demand loan - 13,354,165 505,771,478 438,411,390

These loans are taken from various local banks mainly for the purpose of working capital financing. To secure these facilities the Company has mortgaged its property, plant and equipment and hypothecated its Stocks and Debtors to the relevant Banks and Financial Institutions. Other information shown in Annexure - E.

23 Trade Creditors Trade Creditors (Payable to Suppliers) 28,242,306 21,526,458 BTB Liabilities to Banks 308,766,159 60,354,323 337,008,465 81,880,781 For further details please refer to Annexure-C i) Trade Creditors under foreign currency has been presented in BDT and fluctuation loss has been charged

to profit and loss account.

ii) This represents amount payable to regular suppliers of raw materials, chemicals, packing materials etc.

iii) All suppliers were paid on a regular basis.

24 Other Payable Gas Bill 32,224,526 15,290,873 Electricity Bill 5,670,552 8,793,276 Salary - HO 4,949,908 4,526,832 Salary - Factory 18,853,163 16,116,906 Audit Fee 225,000 350,000 Interest Payable 24.01 3,966,214 12,905,254 WPPF - Non-Current portion 24.02 17,051,318 13,728,627 WPPF - Current portion 24.02 7,512,170 3,014,077 Insurance Premium 5,483,839 - Others 46,611,196 40,840,788 142,547,886 115,566,633

i) These payable were incurred from normal business operation and paid regularly.

24.01 Interest Payable UCB Term loan - against acquisition of Property 689,347 1,638,316 UCB Term loan - 01 265,634 90,559 UCB Term loan - 02 3,011,233 11,176,379 3,966,214 12,905,254

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24.02 Provision for WPPF (Non-current portion): Opening Balance 13,728,627 12,395,478 Provision for the year (5% of Net Profit before Tax) 10,834,861 4,347,226 Less : Current Portion (7,512,170) (3,014,077) 17,051,318 13,728,627 25 Income Tax Provision Opening Balance 55,660,202 53,107,749 Add : Provision made during the year 25.01 32,504,583 13,041,678 88,164,785 66,149,427 Less : Tax settled (2016-2017) (10,884,408) (10,489,225) Closing Balance 77,280,377 55,660,202

25.01 Income Tax Provision for the year Profit before income tax 216,697,218 86,944,522 Income Tax provision for the year 32,504,583 13,041,678

26 Revenue Sale of Fabrics 1,572,615,387 384,710,915 Dyeing, Finishing & Processing charge 753,291,445 904,338,548 Cash Subsidy 9,576,100 28,822,747 Others Sales - 4,814,250 2,335,482,932 1,322,686,460

Turnover and other related financials results have changed significantly during this year due to commencement of operation of new weaving unit and yarn dying unit of the company.

26.01 Revenue in Foreign Currency Sale of Fabric in USD $ 29,441,859 $ 16,317,082

27 Cost of Goods Sold Material Consumed 27.01 552,626,726 141,220,161 Manufacturing Overhead 27.02 1,105,863,008 770,896,206 Manufacturing costs for the year 1,658,489,734 912,116,367 Add : Opening Stock of Work in Process 114,509,172 95,810,438 1,772,998,906 1,007,926,805 Less : Closing Stock of Work in Process 63,624,104 114,509,172 Cost of Goods Manufactured 1,709,374,802 893,417,633 Add : Opening Stock of Finished Goods 5,104,533 25,507,396 1,714,479,335 918,925,029 Less : Closing Stock of Finished Goods 25,204,320 5,104,533 Cost of Goods Sold 1,689,275,015 913,820,496

27.01 Material Consumed : Opening Stock of Raw Materials 163,231,861 141,663,207 Add : Purchase during the year 594,292,970 162,788,815 757,524,831 304,452,022 Less : Closing Stock of Raw Materials 204,898,105 163,231,861 Material Consumed 552,626,726 141,220,161


2017- 2018Amount in Taka

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27.02 Manufacturing Overhead : Direct Labour 228,369,548 205,441,501 Factory Overhead 877,493,460 565,454,705 1,105,863,008 770,896,206 Direct Labour Wages 214,977,614 194,694,853 Bonus 13,391,934 10,746,648 228,369,548 205,441,501 Factory Overhead Dyes & Chemicals Opening Stock 153,271,823 169,533,622 Add: Purchase during the year 529,377,842 304,573,990 682,649,665 474,107,612 Less: Closing Stock 165,883,264 153,271,823 Dyes & Chemicals Consumed 516,766,401 320,835,789 Electricity Bill 68,286,351 46,429,770 Gas Bill 108,249,654 91,104,788 External Processing Cost 7,106,630 14,186,411 Exchange Rate fluctuation (gain)/loss 2,962,863 (488,508) Welfare Expenses 4,984,664 4,569,982 Packing Materials 14,354,787 6,583,510 Fuel & Vehicle maintenance 9,085,395 2,204,577 Water Treatment Expenses 75,868 265,484 Medical Expenses 1,804,156 441,054 Fuel, Oil & Lubricants 5,174,415 4,079,612 Repairs & Maintenance 7,161,324 5,041,239 Carrying & Handling 1,898,688 1,583,781 Spare Parts (Electrical & Mechanical) 17,269,107 17,765,722 Depreciation 112,313,157 50,851,495 877,493,460 565,454,705 28 Administrative Expenses Directors Remuneration 3,600,000 3,600,000 Salary 81,943,693 66,021,946 Bonus 3,825,074 3,402,989 Printing & Stationery 6,320,211 5,646,640 Entertainment 2,460,160 1,986,682 Factory Insurance Premium 3,414,702 5,202,192 Group Insurance Premium 674,857 597,164 Establishment 27,914,211 21,877,640 Newspaper & Periodicals 63,823 54,958 Subscription & Donation 2,339,506 1,530,390 Rent, Rates & Taxes 5,586,396 4,401,797 Fuel 3,758,826 3,132,248 Travelling & Conveyance (Local) 3,138,099 2,392,111 Travelling & Conveyance (Foreign) 4,979,035 1,748,685 Medical Expenses 421,718 107,460 Gratuity 6,504,360 5,449,634 Vehicle Maintenance 2,918,740 1,877,967 Miscellaneous Expenses 218,428 138,993 Telephone 3,481,826 3,582,931

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AGM Expenses 1,286,284 1,368,482 Board Meeting Fee 100,000 96,000 Legal Fees 182,860 1,343,579 Welfare Expenses 62,010 1,544,270 Utility Bills 11,021,318 4,008,420 Contribution to Provident Fund 3,914,856 3,589,197 Trade Promotion 13,821,574 1,121,660 Audit Fee 225,000 200,000 Guest House Expenses 1,482,285 1,184,842 Gardening 237,210 240,210 Postage & Parcel 345,387 143,100 Repairs & Maintenance 2,471,152 1,551,282 Amortization of Computer Software 373,555 466,944 Provosion for doubtful Debts/Bad Debt written off 13,404,623 4,468,207 Depreciation 31,202,370 19,518,135 243,694,149 173,596,755 29 Selling and Distribution Expenses Selling & distribution expenses 26,688,826 8,875,586 C & F expenses 98,227 46,373 Advertisement 1,365,214 1,242,046 Trade promotion expenses 4,968,559 3,367,570 Local carrying cost 3,394,461 3,146,936 36,515,287 16,678,511 30 Financial Expenses Janata Bank 19,932,457 16,744,654 Bank Asia 33,165,790 18,414,911 Brac Bank - 1,250 UCBL 24,518,472 19,157,826 Bank Charge & Commission 4,164,197 3,955,546 Interest on Term loan 58,154,832 73,683,779 139,935,748 131,957,966 31 Contribution to WPPF This amount represents the provision @ 5% on the Profit Before Income Tax 10,834,861 4,347,226

32 Non-operating Income Interest Income 1,449,340 1,531,110 Gain/(Loss) on Disposal of Assets 20,006 3,127,906 1,469,346 4,659,016

33 Earnings Per Share (EPS) (a) Profit after tax 182,840,047 72,057,481

(b) Weighted Average Numbers of Shares Outstanding 91,057,312 91,057,312 Basic EPS (a/b) 2.01 0.79

34 Net Assets Value Per Share (a) Shareholders' Equity 3,582,769,264 3,466,367,994

(b) No of Share outstanding 91,057,312 91,057,312 Net Assets Value Per Share (a/b) 39.35 38.07

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. M. M

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57 A

nn

ual

Rep

ort

201

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18




Amount in Taka

36 Contingent LiabilitiesThis has been considered as per IAS 37" provisions, Contingent liabilities, and contingent assets". As on 30 June 2018 following dues revealed as contingent liabilty of the company:

Particulars

Letter of Credit 349,260,000 Bank Guarantee 11,012,000

37 Financial risk management The Company has exposure to the following risks from its use of financial instruments: Credit risk Liquidity risk Market risk

The Company management has overall responsibility for the establishment and oversight of the Company's risk management framework. the Company's risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies, procedures and systems are reviewed regularly to reflect changes in market conditions and the Company's activities. This note presents information about the Company's exposure to each of the above risks, the Company's objectives, policies and processes for measuring and managing risk, and the Company's management of capital.

37.1 Credit riskCredit risk is the risk of a financial loss to the Company if a customer or counterparty to a financial instru-ment fails to meet its contractual obligations, and arises principally from the Company's receivables.

The Company's exposure to credit risk is influenced mainly by the individual characteristics of the

customers. Receivables are normally paid within very short time from when they are invoiced and credit risk from these receivables is very minimal.

The Company generally does not sell goods other than Export L/C confirmed by concerned Banks being a deemed exporter.

The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the balance sheet.

(a) Exposure to credit risk

The carrying amount of financial assets represents the maximum credit exposure. The maximum expo-

sure to credit risk at the reporting date was:

Trade receivables 807,269,581 420,873,153 Intercompany receivables 287,986,597 336,093,946 1,095,256,178 756,967,099

Intercompany receivable is also through L/C confirmed by respective Banks.

(b) Ageing of receivables The ageing of trade receivables and intercompany receivables at the end of the reporting period were:

(i) The ageing of trade receivable as at the date of the statement of financial position was:

Invoiced 0-30 days 28,702,811 30,575,071 Invoiced 31-60 days 60,974,194 84,057,682 Invoiced 61 days and above 717,592,576 306,240,400 807,269,581 420,873,153

58 A

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ort

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(ii) The ageing of intercompany receivable as at the statement of financial position was: Invoiced 0-30 days 42,910,307 44,755,676 Invoiced 31-60 days 17,185,582 64,298,393 Invoiced 61 days and above 227,890,708 227,039,877 287,986,597 336,093,946 The Company's export L/C is made for 04 months credit period.

37.2 Liquidity riskLiquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due the Company's approach to managing liquidity (cash and cash equivalents) is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company's reputation. Typically, the Company ensures that it has sufficient cash and cash equivalents to meet expected opera-tional expenses, including financial obligations through preparation of the cash flow forecast, prepared based on time line of payment of the financial obligation and accordingly arrange for sufficient liquidity/fund to make the expected payment within due date. Moreover, the Company seeks to maintain short term lines of credit with scheduled commercial banks to ensure payment of obligations in the event that there is insufficient cash to make the required payment. The requirement is determined in advance through cash flow projections and credit lines with banks are negotiated accordingly.

37.3 Market riskMarket risk is the risk that any change in market prices, such as foreign exchange rates and interest rates will affect the Company's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters. As stated earlier, 100% of the Company's sales revenue and substantial part of payments are denomi-nated in USD, creating natural hedge in foreign exchnage risk exposure.

Particulars

Value of import: Raw materials 925,909,588 Spare parts 12,999,417 Foreign Travel for Company's Business 4,979,035

38 Capacity Utilisation

39 Payments/ Perquisites to Directors/OfficersNo director gets any remuneration from the Company other than Managing Director Mr. Abdullah Al-Mahmud. The amount of his remuneration is Tk. 36,00,000 per year. The number of staff and their drawing criteria mentioned below: 30-06-2018 30-06-2017

Number of staff drawing Tk 36,000 and above per year 1,287 1,098 Number of staff drawing below Tk 36,000 per year - - Total number of staff 1,287 1,098

*Woven Fabric Yards 32,400,000 24,222,396 74.76% (8,177,604) *Gray Fabric Yards 9,878,000 9,572,849 96.91% (305,151) Yarn Dye Kgs. 1,368,750 881,714 64.42% (487,036)

*Production Capacity for 3 shifts.

Particulars UnitInstalledCapacity

Utilisation duringthe period

% ofUtilisation

Over/(Under)utilisation

Amount in Taka

59 A

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ort

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40 Post Balance Sheet EventsThe Board of Directors of the Company in its meeting dated 25-10-2018 recommended 10% Cash Dividend for General Shareholders only (other than Directors) for the year 2017-2018.

41 Status of Tax AssessmentTax assessment of the company has been completed up to the Assessment Year 2017-2018 and all tax liabilities have been settled in full.

42 General i. Figures in the notes and annexed financial statements have been rounded off to the nearest taka.

ii. These notes from an integral part of the annexed financial statements and accordingly are to be read in conjunction therewith.

iii. Figures relating to the previous year included in this report have been rearranged, wherever considered necessary, to make them comparable with those of the current year without, however, creating any impact on the operating result and value of assets and liabilities as reported in the finan-cial statement for the current year.

iv) Reconcilation of net income with cashflows from operating activities . Cash flows from operating activities Net Profit : 182,840,047 Add: Depreciation 143,515,527 Total 326,355,574 Changes in non cash item and others (172,734,158) Net Cash Flow from operating activities 153,621,416

Company SecretaryManaging Director Director Sd/- Sd/- Sd/-

60 A

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ort

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18


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61 A

nn

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Rep

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7-20

18




A. K. M. Knit Wear Ltd. 57,421,523 39,489,847 Aman Graphics & Designs ltd. 18,481,178 5,995,108 Aman Knittings Ltd - 87,188 Atlantic Garments Ltd. 1,649,703 1,649,703 Babylon Casual Wear Ltd. 11,375,002 7,951,015 Centex Textile & Apparels. - 1,546,174 Dhaka Hongkong - 1,855,035 Experience Clothing Co. Ltd. - 1,779,073 Farkan Tex Ltd. - 1,659,786 Hamid Weaving Mills Ltd. 122,200,650 229,257,367 Interco Design Ltd. 374,870 8,246,223 Intraco Fashion Ltd. - 1,383,755 Islam Garments Ltd. 1,926,017 - Jeans Manufacturing Co Ltd. - 3,760,577 Kanpark Bangladesh App.(Pvt) Ltd. 19,356,602 5,636,924 Multi Safh Bags Ltd. - 1,522,549 Opex Garments Ltd. - 67,842,426 Pioneer Apparels Ltd. 5,931,518 1,691,492 Russel Garments Ltd. 37,935,023 125,377 Sams Attire Ltd. 18,343,953 1,193,400 Sharmin Apparels Ltd. 26,283,857 16,542,006 Smart Jeans Ltd. - 25,520 Tazrian Weaving Mills Ltd. 165,785,947 106,836,578 That'S It Sportswear Ltd. 109,859,202 112,541,093 Tiffiny,S Wear Ltd. 1,806,901 11,371,488 United Apparels Industry Ltd. - 2,474,345 AKR Fashion Ltd - 2,043,709 Dada (Dhaka) Ltd. - 6,484,956 Regency Three Ltd. - 4,765,183 Radission Apparels Ltd. - 5,255,465 Tarasima Apparels Ltd. 44,366 9,856,452 Ananta Apparels Ltd. 100,727,287 22,658,123 Sterling Creation Ltd. 45,864,304 7,945,832 Arunima Apparels Ltd. - 9,905,906 Jeacon Garment Ltd. - 524,570 Panaroma App. Ltd. 6,712,234 9,327,095 TRZ Garments Industry Ltd. - 5,289,429 Needle Work Ltd - 2,987,876 Polestar Fashion Design Limited - 918,216 Tasniah Fabrics Ltd. 3,400,147 1,557,883 Aswad Compositemills Ltd 503,572 5,569,983 Dird Compositemills Ltd 172,067 4,193,186 Masco Industries Ltd - 906,980 Thermax Yarn Dyed Fabrics Ltd. 6,657,334 22,906,851 Concept Knitting Ltd. - 536,764 Zaheen Knitwear Ltd. - 776,151

HAMID FABRICS LIMITEDList of Trade Debtors

Name of Debtors

Annexure- B

62 A

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Shanta Expressions Ltd. 1,101,478 92,441 A Plus Industries Ltd. 1,812,702 - Anupom Hosiery (Pvt) Ltd. 3,188,598 - Artistic Design Ltd. 85,153,311 - Bando Design Ltd. 16,002,240 - Binni Garments Ltd. 8,358,363 - Creative Collection Ltd. 20,737,507 - Dekko Apparels Ltd. 896,255 - Dekko Readywears Ltd. 2,038,658 - Golden Harrison Ltd. 3,338,520 - Masihata Sweaters Ltd. 268,600 - Maxcom International (Bd) Ltd. 9,734,945 - Modiste (Cepz) Ltd. 8,408,489 - Natural Denims Ltd. 11,703,617 - Norm Outfit & Accessories Ltd. 10,803,960 - Roulin (Bd) Ltd. 16,827 - Section Seven Apparels Ltd. 970,262 - Snowtex Apparels. Ltd. 8,971,658 - Vertex Wear Ltd. 37,671 - Vintage Denim Ltd. 6,039,550 - Windy Apparels Ltd. 32,851,232 - Youth Fashion Ltd. 6,368,411 - United Knit wear (Pvt) Ltd. 3,999,121 - Momtex Expo Ltd. 294,820 - IL Bangla Ltd. 1,742,326 - Mascotex Ltd. 2,895,628 - Far east Knitting & Dyeing Industries Ltd. 470,078 - Masco Cotton Ltd. 433,538 - Fariha Knit Tex Ltd. 3,801,375 - Echotex Ltd. 610,549 - Wear Mag Ltd. 8,453,951 - Brandix Apparels Ltd. 6,683,849 - New Wide Garments Ltd. 27,374 - Rising Apparels Ltd. 2,108,451 - Fluctuation Gain on Debtors 62,119,007 - Total 1,095,256,178 756,967,099

Name of Debtors

63 A

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S S Enterprise 399,457 399,457 Gaowsia Trading 397,900 617,690 The Portland carrier 338,000 588,000 M. Shaheen & Co. Ltd - 35,555 The Nizampur Agency 272,791 344,826 Al Helal transport Agency 18,000 214,512 Anowara Logistics 1,364,000 475,580 Safe Express 68,521 132,914 Kalkini Commercial Pvt Ltd 553,829 136,568 Xplore Enterprise 17,824 2,550 M. Shaheen & Co. Ltd 45,477 - Shakiat Construction 1,041,935 - Lion Trading coropration 7,242 - Emon/Harun Paper Tube 2,263,772 2,051,065 Gaowsia Trading 1,335,762 1,632,547 Libin poribahan sangsta - 100,300 M. Shaheen & Co. Ltd 2,791 2,791 Al Helal transport Agency 167,000 230,448 Anowara Logistics 851,611 721,960 N.P. Chemical 7,815,257 8,987,057 Safe Express 189,744 119,322 The Nizampur Agency 882,693 877,693 The Portland carrier 221,500 332,500 Samuda Chemical complex 554,106 605,405 Taxsource international 6,043,108 2,700,827 Sparkle colors 168,400 168,400 Kalkini Commercial Pvt Ltd - 48,491 A S M Chemical Industries Ltd 996,159 - Tasnim Chemical Complex Ltd 652,343 - Towis Enterprise 1,113,700 - Shakiat Construction 459,384 - Total 28,242,306 21,526,458

BTB Liabilities to Banks: Janata Bank Limited 69,372,551 29,545,298 Bank Asia Limited 62,628,742 13,671,836 United Commercial Bank Limited 156,004,941 13,889,374 Brac Bank Limited 3,247,815 3,247,815 Exchange Rate Fluctuation loss 17,512,110

Total 308,766,159 60,354,323

HAMID FABRICS LIMITEDList of Trade Creditors

Name of Debtors

Annexure- C

64 A

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- E

PROXY FORM

I/We

of

being a member of Hamid Fabrics Limited do hereby appoint

Mr. /Ms.

of

as my/our proxy, to vote for me/us and on my/our behalf at the Twenty Fourth Annual General Meeting of the Company to be

held on Thursday, December 27, 2018 at 11:00 a.m. at Trust Milonayaton, 545 Old Airport Road, Dhaka.

Signed this ________________day of_________________ 2018

Signature of Shareholder__________________________

Folio/BO ID No__________________________________

No. of Shares____________________________________

_______________Signature of Proxy

ATTENDANCE SLIP

RevenueStampTK 20/-

I hereby record my attendance at the Twenty Fourth Annual General Meeting of the Company being held onThursday, December 27, 2018 at 11:00 a.m. at Trust Milonayaton, 545 Old Airport Road, Dhaka.

Name of Member/Proxy___________________________________________ Signature ________________________________

Folio/BO ID No.___________________________________________________ Date ___________________________________

Note : i)

ii)

Note :

(1)

(2)

This Form of Proxy, duly completed, must be deposited at least 48 hours before the meeting at the Company’s registeredOffice. Proxy is invalid if not signed and stamped as explained above.

Signature of the Shareholder must agree with the specimen Signature registered with the Company and depository register.

Shareholders attending the meeting in person or by Proxy are requested to complete the attendance slip and deposit thesame at the entrance of the meeting hall.

Shareholders and proxies are requested to record their entry in the Annual General Meeting well in time.

In compliance with the Bangladesh Securities and Exchange Commission’s Circular No.SEC/SRMI/2000-953/1950 dated24 October 2000; no Gift/Gift Coupon/Food Box shall be distributed at the 24th AGM.

Hamid Tower (5th & 6th Floor), 24, Gulshan C/A, Circle-2, Dhaka-1212.Phone : (+8802) 8834564-5, 8834104, 9894589, 58814775, 8833549, Fax : (+8802) 58813077

Email: [email protected], Web site: www.mahingroup.com

Hamid Tower (5th & 6th Floor), 24, Gulshan C/A, Circle-2, Dhaka-1212.Phone : (+8802) 8834564-5, 8834104, 9894589, 58814775, 8833549, Fax : (+8802) 58813077

Email: [email protected], Web site: www.mahingroup.com

Documents

ANNUAL REPORT - hfl.com.bd Report 2017- 18 of HFL.pdf · Bankers Bank Asia Limited Brac Bank Limited Janata Bank Limited United Commercial Bank Limited Legal Advisors Ruhul Amin and